The Long Term Investor

In case there is anyone on here that is not familiar with the movie........IDIOCRACY.

I assumed that everyone probably knew that was what I was referring to with the quote......"plants crave electrolytes".

That movie came out long ago....in 2006. It is the perfect satirical look at about where we are today in the USA and the world.

I recommend the movie if you have never seen it and have no idea of why I was puting that quote up on here when talking about the FED....government....the markets....the media...etc, etc, etc.

 

I had a nice gain today like most people. I was 100% in the green today. Plus I got in a beat on the SP500 by 1.11%.

The markets love clarity and certainty. The speculative DRAMA and fear mongering starts anew tomorrow.

 

Speaking of Idiocracy.....whoops.....I mean the FED.

Here’s what changed in the new Fed statement

https://www.cnbc.com/2022/06/15/heres-what-changed-in-the-new-fed-statement.html

 

To continue with the FED.

Powell: Fed 'not trying to induce a recession' with interest rate hikes

https://finance.yahoo.com/news/fed-recession-interest-rate-hikes-june-15-2022-203734474.html

(BOLD is my opinion OR what I consider important content)

"Federal Reserve Chairman Jerome Powell said Wednesday that the central bank hopes to avoid a recession after ratcheting up its pace of interest rate hikes.

“We’re not trying to induce a recession now, let’s be clear about that,” Powell told reporters after the policy-setting Federal Open Market Committee raised short term rates by 0.75%.

Wednesday's move marked the Fed's largest in a single meeting since 1994. Short-term borrowing costs are now in a target range between 1.50% and 1.75%.

Powell said the Fed’s goal is to depress the rapid pace of inflation closer to its 2% target, all while preserving a “strong” labor market. Forecasts released by the Fed showed confidence in the central bank’s ability to hit both marks, although economists say the task will be tough.

Projections from the Fed published Wednesday showed the median official expects interest rates will rise to 3.4% by year-end, well above the 2.5% level that many Fed officials have described as “restrictive” for economic activity.

A “hard landing” outcome would be the opposite of forecasts from the Fed, and may look like a sharp spike in unemployment as the rapid pace of rate hikes halts economic activity.

“There’s a pathway here. It is not going to be easy,” Powell said Wednesday. He added that inflation remains the priority, noting that “clearly, people do not like inflation.”

The median policymaker projected the U.S. economy would experience a still-elevated 5.2% rate of inflation at the end of 2022, but expects that to slow down to 2.6% in 2023. Through the end of 2023, the median projection shows the unemployment rate rising a few tenths of a percentage point — to 3.9%.

For comparison, the most recent read on the Fed’s preferred measure of inflation — personal consumption expenditures (PCE) — showed prices rising by 6.3% on a year-over-year basis in April. The May jobs report showed the unemployment rate at a relatively low 3.6%.

The Fed’s forecasts reflect the central bank’s faith in the effectiveness of a more aggressive rate hike path. After an abrupt pivot to a larger rate hike this week — which tabled previously-communicated plans for a 0.50% move — the Fed now projects further rate increases through the rest of this year.

50? 75? 100?

The Fed's outsized move Wednesday raised some alarm over whether the central bank is now at greater risk of raising rates at a pace that would tip the economy into recession. And this move prompted questions about whether a 0.75% interest rate increase clears a path for even larger moves in the months ahead.

But Powell suggested the Fed does not currently intend on further accelerating the pace of its rate hikes — at least for its next scheduled policy-setting meeting set for July 26-27.

“The next meeting could well be about a decision between 50 and 75 [basis points],” Powell said Wednesday, essentially downplaying any speculation over a 100 basis point move.

However, Powell reminded markets that the central bank retains flexibility on its rate moves — which he said justified the Fed’s sudden decision to abandon plans for a 0.50% move this week.

“Our policy is adaptive and it will continue to do so,” Powell said."

MY COMMENT

The increase by 0.75% today represents an......."oh sh*t"......panic move by the FED. They have no idea what they are doing or the impact of any of their moves on inflation, jobs, the economy or the markets.

 

If this is true.....it is bad news for Crypto.

The Fed is forcing markets to 'flush' crypto speculators: Strategist

https://finance.yahoo.com/news/fed-markets-crypto-191146057.html

(BOLD is my opinion OR what I consider important content)

"Despite the rise of digital currencies, the Federal Reserve has shown the crypto markets who's boss and who will stay boss well into the future.

"What the Fed is forcing the markets to do is flush out all areas of froth," iCapital Chief Investment Strategist Anastasia Amoroso said on Yahoo Finance Live (video above) "I am not calling all areas of crypto froth, but in a market that continued to trend up there were structures upon structures and derivatives upon derivatives that built up on average coins. So it's starting a flush out in very important parts of crypto. I think that is a good thing."

The Fed seems to have darn near broken the back of the crypto market in the past two months amid a tougher stance on inflation-fighting via interest rate increases.

Bitcoin prices fell below $22,000 this week in a broader flight to safety in markets. The total value of the crypto market plummeted to below $1 trillion, from roughly $3 trillion in late 2021.

Crypto-centric stocks such as Coinbase, RobinHood and Microstrategy continue to be hammered.

Coinbase, which is owned in by Wood's flagship Ark Innovation ETF, recently froze hiring and announced the the crypto trading platform would layoff 18% of its workforce.

The flushing of the speculators calls into question the common rallying cry that bitcoin will hit $1,000,000 by 2030 — or even whether it's worth buying the currtent crash.

"No," 22V Research founder Dennis Debusschere said on Yahoo Finance Live when asked if now is a good buying opportunity into the beat-up crypto space. "We are in an environment where the Fed is tightening financial conditions, and in a tighter financial conditions backdrop speculative assets like bitcoin are going to get hit."

Debusschere added that bitcoin "has not done the job of hedging like it was advertised to do.""

MY COMMENT

Poor Crypto, if this is true. I dont follow it enough to really know. All I know is that it has NOT performed as the hedge against inflation and other conditions as everyone was told it would by all the Crypto experts.

 

Since these are.....ACTUAL....business people.....they probably know what they are talking about.

Manufacturers' outlook dims as recession fears grow
Inflation is manufacturers' top concern

https://www.foxbusiness.com/economy/manufacturers-outlook-dims-recession-fears-grow

(BOLD is my opinion OR what I consider important content)

"U.S. manufacturers' sentiment declined in the second quarter of 2022 as companies grappled with soaring inflation, worker shortages and supply chain struggles.

While optimism for their own businesses still remained strong, leaders expressed concerns over the economy as a whole and doubts about the Federal Reserve's ability to avoid a recession.

The National Association of Manufacturers' Q2 2022 Manufacturers' Outlook Survey released Wednesday showed that the manufacturing outlook index dropped to 55 last quarter, down from 59 in Q1. Over the same period, the percentage of respondents who expressed a positive outlook for their own firms dropped from 88.8% in Q1 to 82.6% in Q2.

In the latest survey, manufacturers overwhelmingly pointed to increases in raw material costs as their top business challenge, with 90.1% of respondents citing it as a primary issue they are facing.

"Through multiple crises, manufacturers have proven remarkably resilient, but there’s no mistaking there are darker clouds on the horizon," said NAM President and CEO Jay Timmons in a statement announcing the survey's results. "A majority of our surveyed members believe inflationary pressures are making a recession more likely within the next year."

Three-quarters of manufacturers told the NAM that inflationary pressures were worse today than six months ago, and more than half (59.3%) said they believed inflationary pressures would make a recession more likely in the next 12 months.

Manufacturers also did not express optimism that the Federal Reserve would be able to prevent a recession as the central bank battles to curb inflation that is currently at a 40-year high.

More than 52% of respondents said they did not believe the Fed would be able to avert a recession in 2022 or 2023, while only 11.6% answered that the Fed would be successful in achieving a "soft landing." The remaining 36.3% said they were uncertain about whether the Fed could steer the U.S. out of inflation while avoiding a recession this year or next.

"Russia’s war on Ukraine has undeniably exacerbated higher energy and food costs," Timmons said. "This, along with record deficit spending since the pandemic began, has created the highest inflation since 1981."

He added, "But actions here at home can help ease these pressures, including first and foremost harnessing every energy resource available to us domestically and quickly—and refraining from imposing new taxes on manufacturers or families.""

MY COMMENT

Of course......we are unlikely to see either of the above steps taken........ramping up energy production and refraining from imposing new taxes.

In fact we are now seeing calls from the highest levels of the government for a windfall profit tax on oil companies. This is INSANITY......considering that we are either in a recession or teetering on the edge of one.

 

I am posting this for the content on credit card and other debt and mortgage rates.

Here’s what the Federal Reserve’s 0.75 percentage point rate hike — the highest in 28 years — means for you

https://www.cnbc.com/2022/06/15/what-the-feds-highest-rate-hike-in-28-years-means-for-you.html

(BOLD is my opinion OR what I consider important content)

"The Federal Reserve raised its target federal funds rate by 0.75 percentage points, the largest increase in nearly three decades, at the end of its two-day meeting Wednesday, in an effort to quell runaway inflation.

“We at the Fed understand the hardship that high inflation is causing,” Federal Reserve Chairman Jerome Powell said in a press briefing Wednesday. “We’re strongly committed to bringing inflation back down and we’re moving expeditiously to do so.”

The latest move is only one part of a rate-hiking cycle, which aims to crush inflation without tipping the economy into a recession, as some fear could happen. The Fed last raised rates by 75 basis points in November 1994.

“The motivation for all of this is that prices are going up,” said Chester Spatt, a professor of finance at Carnegie Mellon University’s Tepper School of Business. “The Fed is trying to fight that with higher interest rates to reduce demand.”

For consumers, this aggressive approach could eventually bring relief from surging prices. It also comes at a cost.

What the federal funds rate means to you

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and saving rates consumers see every day.

“We’re certainly going to see the cost of borrowing escalate relatively quickly,” Spatt said.

With the backdrop of rising rates and future economic uncertainty, consumers should be taking specific steps to stabilize their finances — including paying down debt, especially costly credit card and other variable rate debt, and increasing savings, said Greg McBride, chief financial analyst at Bankrate.com.

Pay down high-rate debt

Since most credit cards have a variable interest rate, there’s a direct connection to the Fed’s benchmark, so short-term borrowing rates are already heading higher.

Credit card rates are currently 16.61%, on average, significantly higher than nearly every other consumer loan, and may be closer to 19% by the end of the year — which would be a new record, according to Ted Rossman, a senior industry analyst at CreditCards.com.

If the APR on your credit card rises to 18.61% by the end of 2022, it will cost you another $832 in interest charges over the lifetime of the loan, assuming you made minimum payments on the average $5,525 balance, Rossman calculated.

If you’re carrying a balance, try consolidating and paying off high-interest credit cards with a lower interest home equity loan or personal loan or switch to an interest-free balance transfer credit card, he advised.

Consumers with an adjustable-rate mortgage or home equity lines of credit may also want to switch to a fixed rate, Spatt said.

Because longer-term 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the broader economy, those homeowners won’t be immediately impacted by a rate hike.

However, the average interest rate for a 30-year fixed-rate mortgage is also on the rise, reaching 6.28% this week — up more than 3 full percentage points from 3.11% at the end of December.

“Given that they’ve already gone up so dramatically, it’s difficult to say just how much higher mortgage rates will go by year’s end,” said Jacob Channel, senior economic analyst at LendingTree.

On a $300,000 loan, a 30-year, fixed-rate mortgage would cost you about $1,283 a month at a 3.11% rate. If you paid 6.28% instead, that would cost an extra $570 a month or $6,840 more a year and another $205,319 over the lifetime of the loan, according to Grow’s mortgage calculator.

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising, so if you are planning to finance a new car, you’ll shell out more in the months ahead.

Federal student loan rates are also fixed, so most borrowers won’t be impacted immediately by a rate hike. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates — which means that as the Fed raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

That makes this a particularly good time to identify the loans you have outstanding and see if refinancing makes sense.

Hunt for higher savings rates

While the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate. As a result, the savings account rates at some of the largest retail banks are barely above rock bottom, currently a mere 0.07%, on average.

“The rates paid by bigger banks are largely unchanged, so where you have your savings is really important,” McBride said.

Thanks, in part, to lower overhead expenses, the average online savings account rate is closer to 1%, much higher than the average rate from a traditional, brick-and-mortar bank.

“If you have money sitting in a savings account earning 0.05%, moving that to a savings account paying 1% is an immediate twentyfold increase with further benefits still to come as interest rates rise,” according to McBride.

Top-yielding certificates of deposit, which pay about 1.5%, are even better than a high-yield savings account.

However, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time.

To that end, “one main opportunity out there is the possibility of buying some I bonds from the U.S. government,” Spatt said.

These inflation-protected assets, backed by the federal government, are nearly risk-free and pay a 9.62% annual rate through October, the highest yield on record.

Although there are purchase limits and you can’t tap the money for at least one year, you’ll score a much better return than a savings account or a one-year CD.

What’s coming next for interest rates

Consumers should prepare for even higher interest rates in the coming months.

Even though the Fed has already raised rates multiple times this year, more hikes are on the horizon as the central bank grapples with inflation.

While expectations for those increases had been quarter and half-point hikes at each meeting, the central bank could hand out further 50 or 75 basis point increases if inflation doesn’t start to cool down."

MY COMMENT

The next 1-2 years are going to be really hard for house hunters. I had no idea that 30 year mortgage rates in some areas had already gone over 6%.

Credit card rates are also going to very quickly escalate. Not a pretty picture for consumers and house hunters over the next 6-24 months.

The current stock markets are very SAD confirmation that short term money......needed in the next 12-36 months should NEVER be in the stock markets.....unless you can afford to lose it.

 

Here is a very nice article from the Washington Post detailing the failures and actions that got us to where we are today with inflation and the FED.

Markets and households lose faith that Fed can handle inflation

https://www.msn.com/en-us/money/mar...n-handle-inflation/ar-AAYsu2v?ocid=uxbndlbing

(BOLD is my opinion OR what I consider important content)

"The Federal Reserve’s missteps in waiting too long to tackle the greatest run-up in prices in four decades has shaken trust across markets and the American public that it is up to the task of curbing inflation.

On the eve of a high-stakes Fed policy announcement, investors, economists and policymakers were on edge over how sharply the Fed would raise interest rates to deal with inflation, which hit a new peak in May.

Financial market volatility and losses deepened on Tuesday, fueled by fears that the Fed continues to misjudge inflation and will come down too hard on the economy, prompting a recession. The S&P 500 has fallen into bear market territory — a 20 percent fall from the most recent high — and all the indexes have accelerated losses for the year.

Even more concerning are new signs that families have lost faith in the Fed’s policies. Consumer sentiment in June sank to a low not seen since the 1980 recession, according to a University of Michigan survey. Similarly, a poll by The Washington Post and George Mason University’s Schar School of Policy and Government found that most Americans expect inflation to worsen and are adjusting their spending habits, a mind-set that can make the surge in prices even worse.

Fed policymakers were already under enormous pressure to slash inflation without inviting disaster for the recovery or spurring a new round of job losses. Now, the Fed is in an even more fraught position, one that goes beyond monetary policy and instead targets the Fed’s most essential tool of all: its credibility.

“It’s very difficult to regain credibility after you’ve lost it,” said Chris Rupkey, chief economist at the research firm FWDBonds. “I know the Fed thinks they have the tools to rein in inflation, but it’s gone so far that now it’s unclear if they have the tools to do that short of raising interest rates to levels that send the economy over the cliff.”

Paradoxically, a big reason Fed policymakers misjudged inflation was because of their strict resolve to avoid the kind of slow labor market recovery that followed the Great Recession, when it took nearly a decade for millions of workers to get back into jobs. Last year, policymakers failed to clearly understand how the pandemic recovery was unfolding in real time, and how few lessons from the last crisis could be applied. Workers returned to work far sooner than expected — though the data didn’t show it immediately — while inflation burrowed deeper into the economy, growing into a bigger threat.

“The pandemic recession was quite different from earlier recessions, which made reading the labor market and assessing the persistence of inflation more difficult than usual for monetary policymakers,” said Ben S. Bernanke, who chaired the Fed from 2006 to 2014.

The process of earning back the public trust could hinge on how the Fed acts this week. Policymakers wrap up a meeting on Wednesday with a new announcement on interest rate increases, which cool off the economy by making a variety of lending, from mortgages to business investments, more expensive. Fed Chair Jerome H. Powell will also appear at a news conference Wednesday afternoon, where he’ll be pressed on the Fed’s plans to stabilize the economy.

For weeks, the Fed had set expectations for an increase of half a percentage point, as it did in May, in the latest of seven rate increases slated for this year. But the most recent and bleak inflation report raised the possibility that Fed leaders will consider a more aggressive increase — three-quarters of a percentage point — to meet the sense of urgency and start to get inflation under control. It would be the sharpest increase since 1994.

“What we need to see is inflation coming down in a clear and convincing way, and we’re going to keep pushing until we see that,” Powell said at the Wall Street Journal’s Future of Everything Festival on May 17.

However, the Fed has a long way to go in convincing the markets, lawmakers and the general public that it can act with enough force without driving up unemployment, or moving so abruptly that the economy lurches back into a recession.

Origins of Fed’s missteps

The Fed’s mistakes have become clearer with hindsight.

Back in 2020, the Fed took on the coronavirus public health crisis with a strong focus on the labor market. Shutdowns and a sharp recession had sucked 20 million people out of the workforce that spring. The Fed was determined to get the labor market back to its pre-pandemic strength, and it pledged to keep up its support for as long as necessary.

Fears of a slow recovery were fresh as Fed leaders debated how long to keep supporting the economy. In September 2020, the Fed said it would keep interest rates near zero — a huge sign of support for the economy — until it saw two major signs of progress.

First, the labor market needed to reach what’s known as “maximum employment,” meaning everyone who wants a job can get one. And second, inflation, which hadn’t been a problem in years, would be allowed to go up beyond the Fed’s normal threshold of 2 percent. Fed policymakers didn’t want to see prices surge, but they were willing to tolerate slightly higher inflation than normal if that meant more people could get back into jobs.

Not all officials agreed. Robert Kaplan, then president of the Dallas Fed, voted against the Fed’s announcement, saying the Fed should have more flexibility on when to raise rates down the line. Part of Kaplan’s fear, he explained in an essay, was that if the Fed waited until the two parts of its test, especially on maximum employment, had been fully met, other problems could take root. The world was bound to look different as the coronavirus economy evolved, in “ways that are predictable and ways that are likely not predictable,” Kaplan wrote at the time.

“These fragilities and tail risks are often much easier to recognize in hindsight than in real time,” he wrote.

The move to focus on getting the labor market back to maximum employment ultimately slowed policymakers’ ability to pivot and check inflation as quickly as they needed to. And as the months wore on, more Fed officials would speak out about the risks of waiting for total job market progress as inflation crept higher.

Just before Biden’s presidency kicked off in January 2021, the economy was shedding jobs again, fueling new fears of a slow-to-heal job market. Through the $1.9 trillion American Rescue Plan, the new administration and Democratic-controlled Congress sent the overwhelming message that after the Great Recession, Washington had not done enough to help workers. They would not repeat the mistake.

Biden’s push for a huge relief bill, coming so soon after previous stimulus efforts, found a surprising ally in the Fed, as Powell waved off concerns that a surge of spending would result in too much inflation, and cautioned that the job market still had a long way to heal.

Lawrence H. Summers, one of President Barack Obama’s top economic advisers, warned about inflation risks, along with Republicans, who were worried about too much government spending. But the consensus at the Fed, the White House and among many outside economists was that inflation hadn’t threatened the economy in years, and even stimulus relief as large as the American Rescue Plan wouldn’t fundamentally change that.

But that assumption didn’t account for the pandemic’s outsize impact on supply and demand. New $1,400 stimulus checks, extended unemployment insurance and a revamped child tax credit boosted Americans’ ability to spend and padded their bank accounts. And people’s insatiable search for furniture, construction materials and everything in between quickly collided with broken supply chains. People wanted to buy cars, but a global semiconductor shortage hampered production. People wanted to build or remodel homes, but the lumberyards couldn’t meet the demand.

Inflation followed.

“Economists tend to rely on statistical models, but they’re only as good as the kinds of shocks that appear in the data that they’re modeling,” said Eric Rosengren, who at the time was president of the Boston Fed. “There were no sequences of supply shocks in that 20-year period, or really over the previous 40 years.”

As inflation crept up throughout 2021, officials weren’t seeing enough progress in the labor market. Monthly jobs reports came in weak, especially when the delta variant of the coronavirus was raging. Economists thought the pandemic was holding back hiring yet again.

But that proved to be wrong. The job market was going gangbusters — the first snapshots of the labor market just didn’t show it yet. Between June and September 2021, the Bureau of Labor Statistics missed more job growth than at any other time on record, underestimating job growth by a cumulative 626,000 jobs.

The revisions made plain how quickly the economy was booming, and how difficult it was to see.

Winning back Americans’ trust

By 2022, the Fed was in full catch-up mode. It moved up its plans for rate increases and the end of its asset purchase program, hoping a steady stream of increases beginning in March would offer enough of a runway. But Russia’s February invasion of Ukraine upended the Fed’s plans, roiling global energy markets and sending gas prices on a tear.

The strain continues to hit families hard. Inflation has weighed on President Biden’s approval numbers and put the onus on Fed officials to acknowledge, even belatedly, the toll of higher prices. After the Fed’s last policy meeting in May, Powell took the podium and began his regular news conference in a rather unusual fashion, staring into the camera and saying he wanted to “speak directly to the American people.”

The Fed raised interest rates by a half a percentage point — its most aggressive move since 2000 — and has since started drawing down its nearly $9 trillion balance sheet.

While there have been a few signs of cooling in the housing market, most Americans aren’t yet feeling relief in their daily lives. Over the weekend, the national average for a gallon of gas hit $5, and the cost to fill a tank is $100 or more in many parts of the country. Grocery prices, in particular, rose sharply in May, with the food index climbing 10.1 percent for the year, the first double-digit increase since 1981. And rents, which have been slowly marching upward, rose again in May, compared against April figures.

In early June, U.S. consumer sentiment plunged to the lowest level since 1980, according to the closely watched University of Michigan survey. A report from the New York Fed showed that the public’s expectations for short-term inflation rose in May, to the highest level seen in a survey that dates to 2013.

The change in consumer sentiment is particularly problematic, because if households don’t trust that price increases are temporary, they start changing their behavior and make inflation even tougher to manage. Indeed, a poll by The Washington Post and George Mason University’s Schar School of Policy and Government found that most Americans are beginning to account for inflation. About 6 in 10 (59 percent) people say they are driving less, minimizing their use of electricity and saving less, while about half (52 percent) say they are trying to buy products before prices rise, the poll finds.

“Not only is the Federal Reserve faced with the risk of inflation becoming embedded into consumer and business expectations, but it must also factor in market behavior into its policy decisions,” Joe Brusuelas, chief economist at RSM, wrote in a Tuesday analyst note. “We now call on the central bank to hike rates in such a way to restore investor confidence and maintain well-anchored, medium-to-long-run inflation expectations.”

Ultimately, even a more aggressive push from the Fed may not be enough to give businesses and families the assurance they need. Rate increases can’t lower gas prices, mend supply chains or persuade people to seek out jobs.

Franz Tudor, chief executive of a beverage company in Florida, said he is increasingly unsure that the Fed’s interest rate boosts will solve his most pressing supply chain problems.

Trucking costs for Coco Cocktail, an alcoholic sparking coconut water, tripled last year and are up an additional 70 percent this year because of rising fuel prices and a shortage of drivers, he said. Tudor feels that slowing the economy by raising interest rates will only end up hurting him and other small-business owners who will have to deal with dampened demand and persistent supply snarls.

“Why are we going to raise rates? It’s not going to fix bottlenecks at the port or bring down my shipping costs,” said Tudor, who lives in San Antonio. “I’m not going to be a conspiracist, but it feels like creating demand destruction to correct inflation sends us into a recession, which is a big concern for me. It’s little businesses like us that will go out.”"

MY COMMENT

This GREAT article lays out.....step by step......the disaster that has been caused by government and the FED over the past year and a half.

It discusses many issues that have been in this thread.......the impact on small business.....the inability of the FED to change or cure supply chain issues......the causes of this disaster, which WAS avoidable....etc, etc, etc.

It is extremely doubtful that anything the FED intends to do will help much at all over the short to medium term. This is because the real issue is supply chain issues. As said above:

".....Ultimately, even a more aggressive push from the Fed may not be enough to give businesses and families the assurance they need. Rate increases can’t lower gas prices, mend supply chains or persuade people to seek out jobs.".........."Franz Tudor, chief executive of a beverage company in Florida, said he is increasingly unsure that the Fed’s interest rate boosts will solve his most pressing supply chain problems.".........."Tudor feels that slowing the economy by raising interest rates will only end up hurting him and other small-business owners who will have to deal with dampened demand and persistent supply snarls."......... "Why are we going to raise rates? It’s not going to fix bottlenecks at the port or bring down my shipping costs,”...........“I’m not going to be a conspiracist, but it feels like creating demand destruction to correct inflation sends us into a recession, which is a big concern for me. It’s little businesses like us that will go out.”"

The above is why the FED has little to no control of what is going on or what is going to happen. My view.....eventually they will stumble into crashing the economy and that will have the side effect of stopping inflation. Unfortunately it will also stop the economy and kill the job markets.

Talk of excess profits taxes, price controls, raising taxes, the refusal to support more energy exploration, etc, etc, etc, show that people are TOTALLY OUT OF TOUCH......welcome to JIMMY CARTER......2.0.....on steroids.

What I find really interesting is the political leanings of the source of this article. Regardless....it is a very well written piece.

 

The markets continue to confirm my view that we are NOT anywhere near the bottom yet. It will eventually happen.

I continue to say we......UNFORTUNATELY.....have another 10-25% to go to reach the bottom. We seem to be just at the begining of people starting to sit up and take notice. We seem to be just at the start of people starting to leave the markets. We seem to be just at the start of CAPITULATION.

Even when we reach the bottom.....which I believe is from 6-18 months away.....that does not mean that we bounce back immediately. Just like in the CARTER economic disaster.....you can linger and bounce along the bottom for a long time. We may recover sooner.......or......we may end up bouncing along the bottom till the next election in 2024.

 

Well said above Zukodany. I was thinking exactly the same thing.......as a collector. There have been many, many categories of collectables over the years that had limited supply.......and yet......they are worthless.

I dont have anything to add to your comment above....it says it all.

 

To be a realist.......regarding the very short term.....the SP500 is now down year to date by about 23%. It is down by a whopping 8.37% over the past FIVE market days.

NO.....I am not trying to scare the sh*t out of young or new investors......but clinical realism is very necessary to face what is going on and where we may be headed.

 

WTF......is going on with the airlines and transportation systems.......their ability to operate is collapsing. OBVIOUSLY we are NOW seeing the impact of ridiculous COVID regulations and vaccine mandates on pilots and others in this and other industries. Take away people's rights and impose mandates on them.......and this is what you get.

It is amazing how......over the past 4-6 months......in a number of industries and businesses employees seem to have just disappeared. Airlines, small business, fast food, restaurants, air traffic controllers, motel staff, etc, etc, etc........It is like a weird science fiction movie......one day the world wakes up and.......POOF.......half the employees in various industries and businesses have vanished overnight. Where did they all go?

 

Sorry for.......seeming......to be so negative today. I am in a short term CLINICAL REALITY phase today.

SO......here is a bit of long term advice.

Five Things to Keep in Mind During Bear Markets

https://blog.validea.com/five-things-to-keep-in-mind-during-bear-markets/

(BOLD is my opinion OR what I consider important content)




“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.”

— Peter Lynch, One Up On Wall Street

We are officially in a bear market. We crossed a 20% intraday loss a while back so it is only a matter of semantics, but we have finally closed below the official threshold. But what does that mean going forward? I certainly don’t know and it is likely that most experts who try to predict the future don’t either. But there are some key lessons I think all of us can keep in mind during bear markets.


Here are five lessons I think investors should remember during times like this.

1) Stocks Are the Best Long-Term Investment There Is

There is no asset class that outperforms stocks over the long run. They outperform bonds. They outperform commodities. They outperform cash. And for all the Bitcoin supporters out there, there is no currency nor other store of value that beats stocks. Stocks have trounced gold over the long run. There is nothing you can invest in that has more evidence to support its long-term performance than stocks.


http://www.investorsfriend.com/asset-performance/

Take a look at the chart below of the long-term performance of stocks and then look at the recent decline. The small blip all the way to the right that represents it is inconsequential relative to the rest of the chart. The same thing will be true whether we get a 25%, 30% or 40% decline here. Even 2008 looks minor relative to the long-term returns.


http://www.macrotrends.net/2324/sp-500-historical-chart-data

But with performance comes risk. The path to long-term outperformance in stocks includes sitting through substantial pain. That pain is the price you pay for the long-term results you get.

2) Time is Your Friend

In times like this, it is important to widen your view. On a daily basis, stock returns are close to a toss-up. Over a year, the odds are about 70% in your favor. Over 20 years, the odds are overwhelmingly good.


http://awealthofcommonsense.com/2014/05/market-makes-feel-terrible-every-single-day/

Nothing is certain in investing so we can’t take these historical statistics and imply the future will look the same as the past. For example, investors in Japan will beg to differ with the idea from this chart that positive 20-year returns have a 100% probability. But either way, the longer your horizon, the greater your odds. This is important to keep in mind at times like this.

3) Beware Bear Market Analogues

Just in the past week, I have seen the current bear market compared to four different markets in history. Some compare it to the 1970s due to high inflation. Others compare it to 2000 because that bear market was driven by technology overvaluation. Still others compare it to 2008 because they see a more significant crisis coming. And finally, the biggest doom and gloomers see a repeat of the Great Depression. But the reality is that every bear market follows its own path. Each has its own facts and circumstances. And expecting history to follow any exact pattern can be dangerous. History often rhymes, but it rarely repeats itself exactly.

4) It is Darkest Before the Dawn

We would all love to get the obvious all clear signal that a bear market is over. It would be great for the market and economy to tell us when it is time to aggressively invest in risk assets. But if history is any guide, the bottom will be the opposite of that. It is likely the economy will be a mess. It is likely many forecasters will be telling us it is going to get much worse. It is likely many will be questioning whether stocks are worth investing in anymore. At the 2008 bottom, things were still looking very ugly. In 2020, there was a worldwide pandemic with no end in sight. If you are waiting for the green light that it is safe to invest, you aren’t likely to get it.

5) Conviction in Your Investment Approach is Essential

The most important thing about investing is often not what you invest in, but how much you believe in it. The reason is that conviction is what allows you to stick with your plan when times get bad. If you begin to question your investment approach during periods of market decline and volatility, then you won’t stick with it. If you don’t stick with it, you won’t achieve your goals.

If you setup an investment plan that makes sense given your goals and risk tolerance, and you believe in it, then you will resist the temptation to question it when things are bad. In fact, you will likely use those periods as opportunities to add to your investment positions because you will see the struggles as a buying opportunity.

This doesn’t mean your approach has to be long equities. In our latest podcast episode, we talked to Wes Gray of Alpha Architect, whose investment approach relies on trend following and managed futures and looks nothing like most investors’ portfolios. But Wes has conviction in it, which will allow him to stick with it when it isn’t working. That is the key to making it work.

In the end, no one knows where we go from here. The Fed may engineer a soft landing. They may not. The 40 years of elevated returns from the 60-40 portfolio may be over. Or people like me who have suggested that to be true might be years early in that call. Inflation may spiral out of control. It may dissipate faster than many believe. But regardless of what happens, the key to being a long-term investor is remembering what “long-term” truly means. Investors who can do that are much more likely to have the proper context during times like this. They are also much more likely to achieve their investing goals."

MY COMMENT

YES.....these are the mantra's of long term investing. Some of us have practiced these suggestions over many decades......some of us are new investors.

In the end.....EVERYONE.....has to simply do what they believe is the best course for them and their family.

 

I left the photo in the above article to inspire a bit of......HOPE and positive brain stimulation.

One way we will know we are at the bottom is when:

People all leave this thread except for a few that remain on here YELLING at me and the few remaining others that we are all MORONS and IDIOTS.

Sorry.....I cant help joking in the face of the current markets. BUT....from past experience what I said above is actually the truth.......and.....will happen if this turns out to be a nasty long term recession.

 

COURAGE.....everyone.