I did just look at my account for the first time and it is also BORING. It was in the red but so slightly that Schwab had me at 0.00% change for the day. Five stocks UP and five stocks DOWN. No reason to any of it at all.....the five UP were AMZN, NKE, HD, GOOGL and TSLA. The five down were ......AAPL, NVDA, MSFT, COST and HON. A boring, drifting, shallow day in the markets.
AMD is having a good day today while NVDA is staying flat. Huge runup by NVDA this year. Seems a few members of this group have benefited from that. I like the discussion on risk adversity and I will say my 'play account' isn't for the light hearted! I'm in a situation where I can take the risk so I do. The other thing about it is I started at $2000 in the account and built my way up. This helps with the metal hurdle. At 21 years old dropping a few hundred dollars seems like a big deal. Then the account grows and dropping a few thousand dollars seems to make you feel uneasy, then in your late 20's you see bigger drops, and in your 30's you see six figure drops that could by a nice house in the suburbs. End of the day by living through the small drops and over time seeing your portfolio still growing is what helps you ignore the noise and hold on for the ride. Also I like the 'run your own race' mentality. It's too easy to try to benchmark yourself with others but there are too many variables to contend with. I have a group of car friends that are pretty 'showy'. With fancy 6 figure exotics. From the outside they all look rich but each one has a different story from being extremely comfortable and the car is inconsequential to they need to hustle every week to make that payment at the end of the month. One has no family or 401k and has all his money tied up in toys. To each their own. While I do a pretty good job at having cars that retain value I don't consider them investments and keep the total value under 10% of my net worth. Lastly, I was at a gathering and a family friend was talking about how they went to cash in investments and 401k due to the debt ceiling. I said that's the dumbest shit I ever heard. People around bought into it and said I should really look into it. I laughed.
For what it is worth here is the markets today. Stocks waver, oil loses more ground: https://finance.yahoo.com/news/stoc...ground-stock-market-news-today-133438692.html (BOLD is my opinion OR what i consider important content) "US stocks wavered Tuesday during midday trading. The S&P 500 (^GSPC) advanced 0.11%, the Nasdaq Composite (^IXIC) gained 0.23%, and the Dow Jones Industrial Average (^DJI) dipped 0.13% around 11:30 a.m. ET. In the commodity market, wheat prices soared as much as 1% after Ukraine said Russian forces had blown up a giant dam in the country’s south, posing supply concerns for the Black Sea grain trade. Meanwhile, oil continued to fall as optimism over Saudi Arabia's plans for an extra million-barrel daily cut in crude output faded. WTI crude futures dropped nearly to $72.04 a barrel, while Brent futures fell slightly to $76.45 a barrel. Treasury yields fell after the US government on Monday started to issue a wave of Treasury bills to rebuild its cash pile, which had been nearly drained over the last few months. The issuance of the new bills could impact liquidity in financial markets and could have an adverse effect, according to investors and analysts. The yield on the benchmark 10-year Treasury rose to 3.7%. The two-year note yield edged up to 4.5%, while the 30-year bond traded down to 3.8%. Meanwhile, the dollar index strengthened. In other news, investors are still digesting events at Apple’s (AAPL) Worldwide Developer Conference on Monday. The tech giant introduced its most ambitious hardware lineup in years, including a highly anticipated mixed reality headset, Apple Vision Pro. Apple shares ticked down slightly to $178.76 Tuesday, after losing hold of a record intraday high of around $185 a share on Monday to end lower. Sentiment elsewhere in tech remained upbeat, with shares of Unity Software Inc. (U) fell more than 4% following a shoutout during the Apple event. GitLab Inc. (GTLB) shares surged 30% after the software company posted an earnings beat in its first quarter while providing positive guidance. Meanwhile, Coinbase (COIN) stock sank nearly 20% at the market open on Tuesday after the Securities and Exchange Commission sued the crypto exchange, alleging that it acted as an unregistered exchange and broker. The news came a day after the SEC filed a separate lawsuit against Binance alleging violations of securities law, sending Bitcoin (BTC-USD) below $26,000, its lowest point in weeks. Elsewhere, Australia's central bank hiked its key interest rate by 25 basis points for the second time in a row. The Australian dollar jumped 0.68% after the surprise move." MY COMMENT It is such a DULL and WORTHLESS day even the financial media cant find anything to talk about. They have had to revert to talking about interest rates in Australia.....wheat prices in Ukraine......and ......Saudi oil production. There is nothing to fear monger at all and nothing going on. A very strange and irrelevant market day today.
Well said TireSmoke. Especially this: "Lastly, I was at a gathering and a family friend was talking about how they went to cash in investments and 401k due to the debt ceiling. I said that's the dumbest shit I ever heard. People around bought into it and said I should really look into it. I laughed." Can you believe that? A total failure of common sense and awareness of reality. You cant really fault younger people for thinking like this.....they dont know any better. This is why you simply have to do your thing and IGNORE all that others around you are doing and thinking. You have to be your own little island. It is SAD. In the end this sort of thing is why most people will never achieve investing results that beat or even come close to being equal to the SP500 long term. The above is classic return KILLING behavior. An investor that is market timing......a false event. Number one they should not be market timing......number two....they are market timing over a fantasy, political, event. The best outcome for them is they will learn a valuable lesson. Unfortunately......they will probably learn nothing......since they will never be able to have the investing self awareness to even realize what they are doing and how CRAZY it is.
Well not much more I can say at the moment.....we will just see how things play out today at the close.
I guess the markets are going to drift this week with very shallow action......while awaiting the FED next week. I dont even see much commentary on the FED....even though it is only a week away.
Just to add a bit more to our good discussion about investing styles. Some very good points made above by all. Even though it does appear we all are doing it a bit differently and even different companies/holdings, there is a common thread I notice amongst us. That is the belief and conviction in our own plans we have implemented. To me, that is a significant point in investing and being able to stay with it when others simply cannot. It is very important to know that about your investing style. As TireSmoke mentioned..."run your own race." A great way to put it. This removes all of that extra chatter and comparison. If you do not believe and construct your plan to fit your needs, goals, and personal tolerance level, you will likely never stay long enough to get the benefits. I think that is some of the reason investors are in and out of things so frequently. They are always chasing someone else's return or perceived success. I'm not talking about rational evaluations of companies and deciding they no longer meet your criteria. That does happen and should when necessary. All plans evolve over a period of time, but I think you get the gist of what I mean. That is the great thing about this thread. We get to see many different styles and thoughts about investing....mostly long termers, but all a bit different in how we go about it. I see many here with that discipline mindset to chart their own course and that is very important to long term success....at least in my opinion.
Good deal tiresmoke. I was never a car guy, but I can relate to your story about people who own valuable goods just to hold bragging rights while they can’t make ends meet. They don’t care, as long as they look like kings on social media and other social circles. What a joke. I drive an old beat up Honda for 8 years now, my wife is the one that got us the Tesla, I guess I was impressed. But I could care less what people think about me in social circles. My responsibility with finances is one, and one only - make sure I provide securities to my family. And it also shows in my portfolio to a degree, I think, I don’t wanna own the COOLEST latest holding, I wanna own the underdog which is gonna beast out tomorrow. Funny thing, in relation to the 40/60 portfolio model. As I said earlier, I don’t own etfs and indexes, but I do own big companies which are “boring”, like APPL, CSCO, GOOG, etc… They are my banks basically, I think, if I just wanted to keep things safe, I would just own these companies and retire. Why make life complicated. But to me, the learning experience is where I’m at currently. And I learned a ton these past 5 years. Just look at the whole crypto thing. That’s like the plot that keeps thickening. 2 years ago you had major major companies and investors preaching to you how important it is to own crypto, including Gary Gensler, who practically now walks it all back. The one valuable lesson I learned from crypto is - if you don’t understand it, don’t put your money on it. Stick to what you know and makes sense to you!
Yep as to the posts above......ALL....of us on here are different ages, at different points in our life, have different assets, family or no family....etc, etc, etc. It would be EXTREMELY STRANGE....if we all held the same investments or did the exact things. As Zukodany said......it is all about creating financial security for your family. AND....it appears that all of us regular posters on here are doing a good job of creating that financial future for our family. NOTE: If you are NOT a regular poster on here.....please join us....post your first message and keep going from there. As you can see there is NOT a single right or wrong way....it is all about what works and is the best fit for....."YOU".
I just got back from running around. I had to take an amp in to the repair guy....it shorted out over the weekend. A cost of doing business and a tax write off. I see that ALL the averages are now green.......but I get the feeling that it is still FAR from a booming day.
A big story today......It seems like common sense that the SEC is correct on this....but it is a very technical issue......and....they are not seeking damages or criminal penalties....just an injunction. SEC sues Coinbase over exchange and staking programs, stock drops 13% https://www.cnbc.com/2023/06/06/sec...d-staking-programs-stock-drops-14percent.html I dont own any Coinbase stock....but.....they are the custodian for my approximately 1/25 of a Bitcoin.
This will be a HUGE issue going forward for people. Should You Let AI Manage Your Retirement Plan? AI-based financial advice can be a highly personalized and effective retirement planning tool. Here's a look at the pros and cons. https://money.usnews.com/money/retirement/articles/should-you-let-ai-manage-your-retirement-plan (BOLD is my opinion OR what I consider important content) Wall Street giants are falling into line to merge artificial intelligence into their data decision-making strategies. That could be a big step toward driving investors toward AI-based financial advice and away from human wealth managers. Consider these emerging AI and financial advisory realities: JPMorgan Chase just announced its first AI financial advisory product called IndexGPT, which offers investors and long-term savers market-oriented financial advice. Morgan Stanley is getting ready to roll out an Open AI-powered chatbot to provide its army of financial advisors access to real-time research and data. A ChatGPT-collected basket of stocks recently bested some of the best UK-based investment funds, generating 4.9% gains against an average loss of 0.8% from 10 popular investment management funds over a seven-week period in a study by Finder.com. Is AI already rising to the level where it supplants human money managers? The possibility is more realistic than one might think. “Although narrow AI has been used narrowly in financial services for more than a decade in areas like credit scoring and fraud detection, with the advent of generative AI we are at the beginning of a monumental leap in how people learn about their finances,” says Saeid Hejazi, chief executive officer at Wally, a Dubai-based digital money management platform. “Now, AI technology can make financial plans and help consumers reach their financial goals in a hyper-personalized, conversational format that goes beyond charts and graphs.” AI could change the retirement saving landscape given investors’ urgent need for individual-oriented financial advice and personalized investment advice. In fact, that's something AI has already been doing on Wall Street for the past several years. Where does AI make the biggest difference as a retirement planning tool? Here are seven things to know about AI and your retirement plan: Wall Street firms are investing in AI in a huge way. AI is a great way to individualize investor portfolios. The technology also empowers financial advisors. AI never sleeps in managing investment portfolios. AI is only as good as the data it's given. Watch out for incorrect information. AI needs work on model development Individualized Help in Creating a Retirement Plan First and foremost, AI is a reliable companion for individuals mapping out their retirement journey. “Maybe you're considering retirement locations like Florida or even Thailand,” Hejazi says. “Or you're weighing up high-yield savings accounts versus 401(k)s or long-term investments or you're figuring out how much to save each month to achieve your dream retirement. AI can step in and support you throughout these deliberations and decisions.” AI’s capabilities go beyond what even the most skilled human advisor can offer in terms of depth and breadth of knowledge, not to mention speed and precision. “The icing on the cake is it's all hyper-personalized, offering the advice most relevant to your unique circumstances,” Hejazi notes. “With its endless patience and clarity, AI can answer any questions you might have, offering an unbiased perspective to help you navigate your path to retirement." An Empowerment Tool for Financial Advisors Another equally important role that AI plays in retirement planning is supporting financial advisors working to find clients the most effective retirement planning tools. “AI empowers money managers with access to information and insights, and the ability to process data, provide dynamic forecasting and consider various strategies quickly and efficiently,” Hejazi says. “This allows the human advisor to provide more value to their clients.” 24/7 Attention to Retirement Plans Retirement planning involves complex calculations, projections and considerations such as life expectancy, inflation and investment returns. In all of those categories, AI can cut to what matters to retirement savers quickly and efficiently. “Most people don't realize just how capable AI is,” says Ryan Niddell, a business management and financial services consultant in Columbus, Ohio. “That’s especially the case when it comes to analyzing vast amounts of historical and real-time data to create retirement savings models tailored to an individual's specific circumstances.” AI can help individuals determine optimal savings rates, investment allocations and retirement age based on their goals and risk tolerance, Niddell notes. “AI can also assist in monitoring and adjusting retirement plans as circumstances change, providing ongoing guidance and recommendations,” he says. Short- and Long-Term Retirement Planning Assistance It’s increasingly apparent AI can be used to help with complex decision-making, pattern recognition and other activities that require a level of objectivity and speed that humans cannot provide. Yet the technology’s reputation for delivering in the short and long term is expanding, too. “Upfront, AI can be used for portfolio construction, investment recommendations, goal setting and risk management,” says Michael Collins, a business and finance professor at Endicott College in Beverly, Massachusetts. “It can also be used to automate and optimize processes related to the management of retirement funds. AI can be used to identify the optimal mix of investments for an individual's portfolio as well as to monitor and adjust the portfolio in order to keep it on track with its goals.” In the long term, AI can be used to “further enhance retirement planning by using advanced analytics and machine learning algorithms to help financial advisors to better understand the needs of their individual clients and create optimized retirement plans for them,” Collins notes. 3 Risks in Using AI for Retirement Planning Retirement planning experts also note some inherent potential downsides to AI, with these three risks topping the list. A lack of personal nuance. The main risk of using AI in retirement planning is the potential lack of understanding of the end user, which could lead to errors or misinterpretations. “AI is a tool, and like any tool, its efficacy depends on the skill of the user and the data you give it. It's the old 'garbage-in-garbage-out' situation,” says Andrew Latham, a financial planner and managing editor at SuperMoney.com. “The reward, however, is substantial: increased efficiency, the potential for enhanced returns and a tailored retirement plan that evolves with the investor's needs.” Incorrect retirement plan information. One risk that's emerged from early trials of AI tools like ChatGPT is the occurrence of what OpenAI calls "hallucinations.” “This is when AI gives information that is confidently asserted but incorrect,” Hejazi says. “That can be a critical issue when dealing with something as important as personal finances.” To mitigate these risks, it's essential for people to do their homework on AI-based financial advisory services. “They should seek out AI tools that are domain-specific – that is, tools that are fine-tuned for financial data,” Hejazi notes. “In addition, for automated services, it's prudent to ensure there's a human safety net – a professional who can verify the advice before any actions are taken based on that advice.” Retirement plan modeling difficulties. One of the main risks is the challenge of developing accurate and reliable retirement planning modeling approaches. “Current language models, although powerful, may struggle with fully capturing the intricacies of financial markets and retirement planning complexities,” says Alexander Harmsen, CEO and co-founder of Global Predictions, a digital-based economic forecasting company. “Inaccurate or flawed models can lead to incorrect recommendations and decisions, potentially impacting individuals' retirement outcomes.” To mitigate risks, a hybrid AI approach that combines the strengths of AI algorithms with proven financial models should be deployed. “Doing so can help address modeling limitations, ensuring more robust and reliable retirement planning outcomes,” Harmsen says." MY COMMENT SORRY......not for me. No matter how smart and accurate the AI is....there is no way it can anticipate and fit my personal needs.....as a human. AND......I do not trust this stuff to be error free. Any error has the potential to be CATASTROPHIC.
Looks like NOTHING changed for me all day long. I ended the same way I started. I had a micro-loss today. I also got beat by the SP500 by 0.21%. Five stocks UP and five stocks DOWN. The DOWNERS today.......AAPL, NVDA, MSFT, COST, and HON. I live to fight another day.
Missed a few weeks of posts and I’m sure you’re all waiting for my update but my account is looking good. Good job to those holding down the fort.
Some "stuff" on the current.....BULL....market. Traders raise bets on stocks falling as S&P 500 nears new bull market https://finance.yahoo.com/news/trad...s-sp-500-nears-new-bull-market-200328364.html (BOLD is my opinion OR what I consider important content) "The S&P 500 (^GSPC) is nearly in a bull market. But that doesn’t mean everyone is latching onto the index for a ride higher. Data from CFTC’s Commitments of Traders report compiled by Bespoke shows S&P 500 futures are 17.4% short. That’s the worst reading since September 2007. The S&P 500 hasn’t taken this long to reach a bull market off the lows since 1957-1958, per Bespoke. And the slow churn upward has strategists increasingly mixed on what comes next. There are folks that say the breadth of the rally, or lack their of, is concerning. "While there will undoubtedly be individual stocks that deliver accelerating growth from spending on AI this year, we do not think it will be enough to change the trajectory of the overall cyclical earnings trend in a meaningful way as top line decelerates and cost pressures remain sticky," Morgan Stanley chief investment officer Mike Wilson wrote in a note to clients on Monday. Investors haven't bet this heavily on a decline in the S&P 500 since 2007. Strategists like Wilson point to a lagging impact of stricter Fed policy and the potential for declining earnings in the second half of the year. But there's also a growing case for the bulls to hold strong through end of 2023. To officially rise 20% from its October low and enter a bull market the S&P 500 needs to hit 4,292.44. Four strategists Yahoo Finance tracks closely have boosted their price target in the last week alone. The most recent of which is BMO Capital Markets chief investment strategist Brian Belski. “Through five months of the year, it has become increasingly clear to us that stock market resilience is here to stay," Belski wrote in a note on Monday . “Admittedly we entered the year more cautious than we have been in the past given the host of uncertainties the market faced to begin 2023, but it seems that all the doom and gloom that many others were prognosticating has yet come to fruition.” Artificial intelligence has been the driver of the recent trend up in stocks. Nvidia (NVDA), the fourth heaviest weighted stock in the S&P 500, has seen shares soar roughly 35% in the last month after projecting higher than expected revenue in the current quarter due to AI demand. Shares of Microsoft (MSFT), Google (GOOGL) and Meta (META) have all increased handsomely this year as well. Even Tesla (TSLA), which has seen in a run in its stock price for a variety of reasons, is seen as an AI play by some. While the run has been significant, not all of Wall Street is calling it over yet either. "The AI hype surrounding the Tech sector is real and likely to propel future growth for many stocks within the space," Belski wrote. "So, despite an extremely strong (year-to-date) sector performance, we believe the momentum, even if it slows a bit, is likely persist for the foreseeable future." Julian Emmanuel, who leads Evercore ISI's Equity and Portfolio strategy, believes we've entered a "momentum market" driven by the AI surge. That means things will be volatile, per Emmanuel. Perhaps indicating those betting against the S&P 500 at a historic rate could be right after all. Or perhaps, Emmanuel, who raised his full-year price target on the S&P 500 from 4,150 to 4,450 on Sunday, will be right come year-end. Either way, it might be a bumpy ride into the next bull market. "Just remember to 'check your emotions at the door,' because it is likely to be quite a rollercoaster ride – exciting at times, terrifying at others," Emmanuel wrote. "That’s just the way “Momentum Markets” are . And emotions are, and always will be, the biggest drag on long term investment returns."" MY COMMENT As a long term.......fully invested all the time investor......I LOVE momentum markets. They produce BIG GAINS. So if that is where we are now....bring it on. There has not been much LOVE showered on this BULL MARKET to date. SO....there is a long way to run before it is over. As to the short traders......that is their problem. I see this little comment above about shorts as simply an attempt to create doubt and manipulate the markets (legally).
MORE on the continuation of the 12 month BULL MARKET. Why the luxury goods stock run isn’t done yet Recent weakness is a good buying opportunity despite high valuations https://www.thenationalnews.com/bus...why-the-luxury-goods-stock-run-isnt-done-yet/ (BOLD is my opinion OR what I consider important content) "High-end luxury goods stocks are not cheap. That, perversely, is why you should buy them, as I will explain. Lately, and ironically, the stocks haven’t been luxurious at all. While global stocks rose, luxury goods stocks fell – about 10 per cent from April 24’s year-to-date high through May. That dichotomy has many fearing luxury’s market-leading rally since last October’s stock-market low is over. They worry that waning US and Chinese demand amid lofty industry valuations signal May’s slide starting a bigger plunge for these stocks. No. Luxury goods stocks’ run isn’t done. And its pricier individual stocks likely lead the way up from here as the global bull market rolls on – counterintuitive as that sounds. The recent weakness is a buying opportunity. These stocks, like big cap tech, have led the way up irregularly since last October’s bear market bottom and for many of the same reasons. They provide quality growth in a market that wants growth in a world where it is very hard to find and, hence, isn’t cheap. Global luxury goods are still up 14.2 per cent year to date – and 41.1 per cent from last year's October 12 bear market low, whumping global stocks’ 20.8 per cent return (in USD). Italy’s luxury goods stocks are up 28.8 per cent this year, Switzerland’s soared 25.5 per cent, while France’s rose 24.8 per cent – all despite last month’s weakness. Why? First, categories hit hardest in bear markets typically bounce highest early in the next bull market. It is an almost 100 per cent perfect market rule. And this time, that was dominated by Big Tech and luxury. During 2022’s market slide, world stocks fell 26.1 per cent in USD terms. What about global luxury goods? Down 38.2 per cent. The bigger drop fuelled more fear over their future, lowering expectations – and priming 2023’s rebound. Doubters still shriek “too much danger” – arguing May’s drop, compounded by still-high valuations, portend its hot streak fizzling fast – or that cheaper stocks (within luxury or elsewhere) are safer bets. Doubly wrong! Yes, the industry’s price/earnings ratio using projected 12-month earnings averages 24.2 – well above world stocks’ 16.3. But don’t fall prey to acrophobia. Low P/Es feel good as if somehow you can’t fall far with them (which you can if the earnings fall). But low P/Es don’t foretell outsized returns after bear market bottoms. Why? P/Es can mislead, particularly early in upturns – like now. As my April column detailed, stocks look forward while earnings look backward. Hence the “P” in P/E ratios climbs fast off the low as markets foresee a brighter future. But earnings forecasts – let alone actual earnings – lag later, amid post bear market dourness. This misleadingly inflates luxury goods’ P/Es now. Don’t believe it? Consider 2020’s growth-led global rebound. In the first six months after global stocks’ March 23, 2020 low in USD, the world market’s forward P/E nearly doubled to 20.8 from 12.8. Yet higher valuations didn’t kill that bull market. It had another 16 months left, with additional 38.3 per cent gains. At the industry level, global luxury goods’ forward P/E rose from a relatively high 17 at the 2020 bear market’s end to a nosebleed 37.9 in six months. Yet luxury goods stocks soared 59.7 per cent higher from there through to the January 4, 2022, bull market peak. Investors’ low-P/E fixation offers you another edge with luxury goods stocks – if you realise a crucial growth stock reality: during growth-led stretches, higher-P/E stocks routinely lead within high-growth categories. Folks seeking growth stocks don’t want lower quality, less certain growth. They want quality, and not the possibility of the highest growth, but the most likely growth! So, the highest-quality companies command growing valuations. When times are good for growth, the high-end stocks lead. It is the same reason lower quality small cap tech isn’t doing as well as big cap tech. And times are good for global luxury goods. Heated inflation didn’t dent their robust gross profit margins, which have remained above 55 per cent since 2021. Meanwhile, big French and Swiss companies racked up strong Chinese sales increases since the economy's reopening – despite stalling recovery fears. The broader Asia-Pacific region offers huge growth farther out as middle classes expand. It now tops the Americas in luxury goods industry revenue share at 40 per cent. Big global brands are now penetrating India as wealth there spreads broader, causing a luxury goods spending boom. Look around you in the Middle East and North Africa. The big global brands are expanding everywhere, particularly in the UAE. So don’t fear luxury goods stocks. Follow their leaders. Use this dip as an opportunity to buy them before their rally resumes. Think French, German, Italian and Swiss. Pay up for the highest quality stocks and watch the leaders lead in this young bull market." MY COMMENT I do NOT post this as a recommendation to buy any particular stocks. I post it as content that is aimed at the continuation of this VERY YOUNG and DISRESPECTED bull market. As we approach the end of the FED rate hikes and have now eclipsed nearly every other negative issue......and.....as we continue to finish the recovery from all the inventory and supply chain issues from the shut-down.....stocks are lined up to BOOM. My view is that we will see steadily increasing earnings over the next 3-5 quarters. There is not a lot of negative "stuff" lined up at the moment. Notice I did not even mention the wave that is coming from AI.
This is currently a micro-news issue. I have seen a few articles fear mongering this issue. Stock Fears Tied to US Debt Wave Miss the Mark, Deutsche Bank Says https://finance.yahoo.com/news/stock-fears-tied-us-debt-201818157.html (BOLD is my opinion OR what I consider important content) "("Bloomberg) — Deutsche Bank is throwing cold water on the prevailing market narrative that the replenishment of the US government’s coffers by a flood of new bill sales will hurt equities. Over the last three years, investors have increasingly pointed to the booming liquidity provided by the Federal Reserve as the driving force behind the rally in stocks, but according to the bank’s strategists Parag Thatte and Steven Zeng, most of the gains can be attributed to fundamentals such as earnings or macroeconomic growth indicators. And the recent strong correlation between Fed stimulus and equity returns is historically inconsistent, making the argument even more questionable. “The whole idea that there’s liquidity holding the market up just doesn’t add up,” Thatte said in a phone interview. Officials are looking to bolster the Treasury General Account, or TGA, after the agency’s cash balance fell to the lowest since 2015 — just before President Joe Biden’s Saturday signing of a bill suspending the debt limit last week. The cash balance on Monday rose to its highest level in two weeks. Deutsche Bank expects the Treasury’s cash buffer will be just shy of $500 billion by the end of the month before ballooning to $600 billion at the end of September. On Tuesday, the Treasury boosted the size of its shortest tenor benchmark bill auctions as the government works to quickly rebuild its cash cushion. The flood of new bills is expected to create a drain on the banking system – which is already struggling to retain deposits – as buyers funnel cash into money-market funds. Some strategists have been making the case that the rapid rebuilding of the US stockpile will drive a liquidity drawdown and in turn a roughly 5% drop in the S&P 500 Index. The notion that stock market moves and the Fed’s liquidity are tied gained credence during the global financial crisis as central banks enacted a series of unconventional monetary policy decisions that included multiple rounds of quantitative easing. The idea picked up steam in 2020 amid the Covid-19 pandemic as retail traders gathered force in the stock market and a sharp correlation arose between liquidity and market moves that August. But for the first part of 2020, that correlation was negative and before the financial crisis, there was none at all, according to a Deutsche Bank analysis. “The inconsistency of the correlation between Fed liquidity and equity returns reflects that it is in fact largely spurious,” the Deutsche Bank strategists wrote in a research note dated Monday. Instead, the market is “arguably overdue” for a selloff since a 3% to 5% pullback in equities happens every two to three months, they said. Investors might be better served by focusing on measures of macro growth when trying to gauge the stock market. Those ties are “strong, intuitive, and consistent” with a relationship that spans decades, according to the strategists. “We don’t think there’s a mystery that needs to be explained through this sort of esoteric force called liquidity,” Thatte said." MY COMMENT I see this as the purveyors of DOOM & GLOOM looking for a new issue to fear monger since all the prior issues are now used up. I also dont see this issue as having ANY legs. It is simply too technical and too obscure to be understandable or of interest to any normal person. Sorry.....you are going to have to find or make up some other issue to drive your fear based media clicks.
As usual......you have to FEEL for the housing markets and buyers. Mortgage demand drops despite rates coming off recent highs https://www.cnbc.com/2023/06/07/mortgage-demand-drops-despite-rates-coming-off-recent-highs.html MY COMMENT Even though ALL housing is LOCAL.....I am in the camp that when this dam breaks....prices are going to take a HUGE leap UP. I would hate to be either a buyer or seller at the moment. BUT.....this is just how the market works.
I like this view.....in terms of the bull market.....and....in terms of the AI boom. Goldman: S&P 500 is undervalued because of the AI boom https://finance.yahoo.com/news/goldman-sp-500-is-undervalued-because-of-the-ai-boom-121316152.html (BOLD is my opinion OR what I consider important content) "Goldman Sachs sees a good bit of upside to the S&P 500 (^GSPC) as new artificial intelligence technology takes hold inside of Corporate America. "We assume that widespread AI adoption occurs in 10 years and lifts trend real GDP growth by 1.1 percentage point for 10 years. In this scenario, earnings per share in 20 years would be 11% greater than our current assumption and the S&P 500 fair value would be 9% higher than today, holding all else equal," strategist Ryan Hammond wrote in a new client note on Wednesday. The S&P 500 currently stands at 4,290 — Hammond's projection sees the benchmark index rising to around 4,719. Hammond cautions, though, that any earnings lift to companies from AI — and subsequent S&P 500 gain — are hard to measure. He does expect upside either way as companies squeeze out margin-boosting productivity gains from the tech. "However, a wide degree of uncertainty exists around the potential productivity boost and the ability of firms to translate AI into increased profits for 10 years. Based on a range of productivity scenarios, we estimate the benefit to S&P 500 fair value could be as small as +5% vs. current levels and as large as +14%," Hammond added. The poster child for the potential profit impact to companies — and perhaps the inspiration for Hammond's note — is none other than chip king Nvidia (NVDA). Nvidia's recent outlook truly surprised the investing masses and unleashed a fresh push higher in the already red-hot Nasdaq Composite (^IXIC). The company said late in May it expects second-quarter revenue to come in at about $11 billion, plus or minus 2%. Wall Street was anticipating $7.2 billion. The guidance helped take Nvidia's market cap to over a $1 trillion, though it has since settled to about $955 billion. As for the AI-stock-heavy Nasdaq Composite, it's now up 33% year to date compared to a 12% gain for the S&P 500. Nvidia founder and CEO Jensen Huang told analysts the very upbeat outlook reflects a fundamental shift to accelerated computing. In turn, that places Nvidia's chips that power generative AI in high demand. "We're seeing incredible orders to retool the world's data centers. And so I think you're seeing the beginning of, call it, a 10-year transition to basically recycle or reclaim the world's data centers and build it out as accelerated computing," Huang said on an earnings call. "You'll have a pretty dramatic shift in the spend of a data center from traditional computing and to accelerate computing with SmartNICs, smart switches, of course GPUs and the workload is going to be predominantly generative AI." Goldman's Hammond thinks Nvidia'a shocking guidance was a "galvanizing event for 2023." "Investors always debate the long-term growth prospects of individual stocks, but it is highly unusual that a large company announces such a quantum leap in its own business outlook. Simply put, the AI-inspired demand for Nvidia's advanced chips is accelerating so rapidly that the consensus sales forecast published earlier this year is now totally obsolete," Hammond said." MY COMMENT I hope that this turns out to be true in hindsight. If so all an investor has to do to benefit for the long term is invest in the simple SP500. It is gong to be a very EXCITING 10-20 years going forward for stocks and investors. No doubt there will be MANY UP and DOWN times as usual. BUT.....we are in the very early stages of a HISTORIC business advance for society. The social and cultural question will be the impact of what we are facing going forward.
