The current state of the stock markets

[Value Buy]

Here is an article to think about. Kind of a "truth or dare" game with the stock market.
I think it is "truth" for the early part of the new year.

www.cnbc.com/2021/12/16/big-wealth-investors-are-likely-to-put-money-to-work-in-stocks-after-amassing-record-levels-of-cash.html

[djAdvocate]

the whole ball of wax is competitive yield.

until they can park their money, risk free, for above inflationary rates, they are not going to move it out of the market. it just makes no economic sense.

[Value Buy]

NY crude is at $101 a barrel this morning.

[Value Buy]

WTI crude in the $108 a barrel range, and did hit $110 a barrel today.
Gasoline futures in the $3.54 a gallon range.

[clarkrl2]

Considering basic charting guidelines, I don't see how anyone could look at WTI long term chart and expect it to fall short of the all time high at around $150. There may be some resistance at the current level up to $115 but beyond that there is no resistance. Fundamentally the demand should be strong with COVID concerns waning, summer approaching, and a major conflict between Ukraine and Russia. My guess is higher rather than lower over the next 3 to 6 months.

[Value Buy]

Have not heard this for quite awhile.

www.cnbc.com/video/2022/03/07/i-think-were-in-a-stagflation-its-the-70s-all-over-again-says-ed-yardeni.html?&recirc=taboolainternal

[djAdvocate]

this could be a double top for oil, too.
this is precisely where we were back in March.

[djAdvocate]

May 5, 2022 6:15:57 GMT -5 Value Buy said:

Have not heard this for quite awhile.

www.cnbc.com/video/2022/03/07/i-think-were-in-a-stagflation-its-the-70s-all-over-again-says-ed-yardeni.html?&recirc=taboolainternal

this is pretty prescient.  
GDP was down in the first quarter.
forecast is that it is down in the second quarter.
capital investment is up.
consumer confidence is down.


tradingeconomics.com/united-states/gdp-growth#:~:text=GDP%20Growth%20Rate%20in%20the,the%20second%20quarter%20of%202020.

[Ombud]

So with RMD age increasing to perhaps 73 now and even more in the future, does one shift from 80% stocks after age 70??

I barely remember investing in the 1970s but I do remember feeling fortunate that my mortgage was only 9.875%😁

[djAdvocate]

May 6, 2022 19:14:59 GMT -5 Ombud said:

So with RMD age increasing to perhaps 73 now and even more in the future, does one shift from 80% stocks after age 70??

I barely remember investing in the 1970s but I do remember feeling fortunate that my mortgage was only 9.875%😁

that must have been LATE 70's, yes?  i don't think MIR was over 10 for more than a year.

[Ombud]

May 7, 2022 12:58:51 GMT -5 djAdvocate said:

May 6, 2022 19:14:59 GMT -5 Ombud said:

So with RMD age increasing to perhaps 73 now and even more in the future, does one shift from 80% stocks after age 70??

I barely remember investing in the 1970s but I do remember feeling fortunate that my mortgage was only 9.875%😁

that must have been LATE 70's, yes?  i don't think MIR was over 10 for more than a year.

I took out the mortgage in 1989

[djAdvocate]

May 7, 2022 17:14:22 GMT -5 Ombud said:

May 7, 2022 12:58:51 GMT -5 djAdvocate said:

that must have been LATE 70's, yes?  i don't think MIR was over 10 for more than a year.

I took out the mortgage in 1989

wow.  i didn't buy my first house until 1995.  i had no idea MIR was that high throughout the 80's.  

[Ombud]

May 7, 2022 18:36:58 GMT -5 djAdvocate said:

May 7, 2022 17:14:22 GMT -5 Ombud said:

I took out the mortgage in 1989

wow.  i didn't buy my first house until 1995.  i had no idea MIR was that high throughout the 80's.  

yes. Took 10 yrs to pay it off but I had to take out a 30 yr mortgage bc thats all 'they' said a single parent working a clerical job could afford. They were wrong

[djAdvocate]

jesus.  i can see why nobody wants to go back to that.
i HOPE that inflation gets under control, but it has been
one disaster after another, so i am quite concerned.

[laterbloomer]

May 7, 2022 19:52:59 GMT -5 djAdvocate said:

jesus.  i can see why nobody wants to go back to that.
i HOPE that inflation gets under control, but it has been
one disaster after another, so i am quite concerned.

What do you think is coming?

[djAdvocate]

May 7, 2022 21:07:34 GMT -5 laterbloomer said:

May 7, 2022 19:52:59 GMT -5 djAdvocate said:

jesus.  i can see why nobody wants to go back to that.
i HOPE that inflation gets under control, but it has been
one disaster after another, so i am quite concerned.

What do you think is coming?

candidly, i think this is quite different than the last time, in that there is a direct cause of the inflation that is tracable to supply chain problems.  but inflation is addictive.  when businesses start raising prices, what is to stop them?  we might be entering one of those cycles.

we will know this year.  if inflation has calmed down by year end (which has been my running theory for a while), then we won't have a stagflation possibility.

[laterbloomer]

May 8, 2022 1:59:13 GMT -5 djAdvocate said:

May 7, 2022 21:07:34 GMT -5 laterbloomer said:

What do you think is coming?

candidly, i think this is quite different than the last time, in that there is a direct cause of the inflation that is tracable to supply chain problems.  but inflation is addictive.  when businesses start raising prices, what is to stop them?  we might be entering one of those cycles.

we will know this year.  if inflation has calmed down by year end (which has been my running theory for a while), then we won't have a stagflation possibility.

One more question - How has this kind of thing traditionally affected the stock market?

[djAdvocate]

May 8, 2022 9:30:52 GMT -5 laterbloomer said:

May 8, 2022 1:59:13 GMT -5 djAdvocate said:

candidly, i think this is quite different than the last time, in that there is a direct cause of the inflation that is tracable to supply chain problems.  but inflation is addictive.  when businesses start raising prices, what is to stop them?  we might be entering one of those cycles.

we will know this year.  if inflation has calmed down by year end (which has been my running theory for a while), then we won't have a stagflation possibility.

One more question - How has this kind of thing traditionally affected the stock market?

there are not many historical precedents.  the only one that comes to mind for me is the 1973-1983 period on the US.  but Wikipedia points out that stagflation hit seven major countries during that period.  the initial response was extremely bearish.  the stock market lost 45% of it's value.

that period was part of a secular bear market that ran from 1966-1980.  this was not a good time to be an investor.  it is very difficult, because you can't just plunk your money down and let it ride.  you have to move in and out of cyclic markets, or have really good picks that supersede the general market.

i am evaluating what investments will outperform the market, and the only thing i can think of currently is commodities.  but i am only about one month into thinking about it.

[Value Buy]

May 7, 2022 18:36:58 GMT -5 djAdvocate said:

May 7, 2022 17:14:22 GMT -5 Ombud said:

I took out the mortgage in 1989

wow.  i didn't buy my first house until 1995.  i had no idea MIR was that high throughout the 80's.  

I believe mortgages were in the mid teens at the end of high interest rate period.

[Value Buy]

Based on the market action Monday and today, I think some big stock traders and fund managers were in trouble Monday and were forced to winners as well as losers to keep from having margin calls.
Cathy Woods announced she sold A CONSIDERABLE NUMBER OF SHARES OF Tesla and Twitter Monday. She also said she bought GM stock.

I am sure there were other fund managers that had to raise cash for redemptions by investors.
High tech that is not making money continued to be clobbered relentlessly.
Today the major banks seem to have been sold and utilities were weak......

[djAdvocate]

the market is getting crushed.  i am down 10% in the last couple weeks.

if i had any sense i would all of my equities right now.
but i don't have any sense.

edit: that was quite cynical.

i have been thinking about this issue for years.  and i think i have a solution.  but it needs better testing.  and i am losing about 1% for every day i test it.  

so that is my frustration talking.

[Value Buy]

May 10, 2022 23:25:52 GMT -5 djAdvocate said:

the market is getting crushed.  i am down 10% in the last couple weeks.

if i had any sense i would all of my equities right now.
but i don't have any sense.

edit: that was quite cynical.

i have been thinking about this issue for years.  and i think i have a solution.  but it needs better testing.  and i am losing about 1% for every day i test it.  

so that is my frustration talking.

After retirement, we both converted our 401-k's to IRA'S.
If they were still 401-k's they would be renamed 301-k's today

Granted we are not down 33% but it feels like we are headed there.  Down about 17% this morning from January 21st numbers in the IRA'S. I do not have the January starting numbers with me here in Florda and too lazy to dig it up online at this time. Part of the problem there are bond holdings in the fund portfolios which are not helping stabilize it..... Have to admit if we compared to January 2021 numbers we are still pretty good but it is more like "what have you done for us lately" mentality right now.
Our utility and big oil holdings are holding the stock portfolio stable, but three other holdings are down about 7% in same time frame.

[djAdvocate]

my results have been quite similar, and it is weird.  because i am hedged HARD.

but it turns out that my portfolio is not very well guarded against BOTH a declining market AND inflation.  i am still working on that.

[Value Buy]

I have been busy the last two days and not following the markets until an hour ago.
This is getting serious.
I know most posters here did not invest back forty some years ago, as many of you are not that old and this is not as similar to the collapse back then just yet, but it feels like Friday or Monday may just see a total sell off, and it will not be pretty. 
I do not think Friday can pull off a big pop tomorrow, and not sure if it does whether it will follow through on Monday. Look for it to get worse on either day.
I think when it stops, we are looking at years to recoup the previous highs in the market levels. No more of taking a few months to recover the dropswe have witnessed the last couple of years
The good thing is, if you are ten or fifteen years from retirement, you will have time to make major gains.

Meanwhile Value Buy may have to come out of retirement if this continues much longer

[djAdvocate]

i pulled about 40% of my retirement funds out over the last 18 months and bought some real estate.  one of the pieces is only up about 7%.  but the second one is up about 60%.  so, in todo, i am up about 35% between them.  that was a respectable decision.  it came out due to Coronavirus provisions, so i got lucky there, too.

so, the 60% i have left in the market is getting crushed.  i am down about 15%, like you.  but as long as the real estate doesn't crash, i will be ok.  and if it does, i can always move to Turkey. 

[tallguy]

May 10, 2022 21:43:51 GMT -5 Value Buy said:

May 7, 2022 18:36:58 GMT -5 djAdvocate said:

wow.  i didn't buy my first house until 1995.  i had no idea MIR was that high throughout the 80's.  

I believe mortgages were in the mid teens at the end of high interest rate period.

Sibling and spouse bought their first house around 1981, I think.  My recollection is that their rate was 18-19%.  I did see one of their mortgage statements, and of their $280 payment only $7 went toward principal. 

[jerseygirl]

Uggh looked at markets down seriously today

[Value Buy]

Okay Oil commodities are messed up today. WTI (west texas intermediate) is now trading above Brent oil on the commodity exchange. 
I cannot remember a time Brent traded lower than WTI. 
A few years ago Brent traded four to six dollars above WTI on a consistent basis. Last few years the gap decreased but usually traded a couple of dollars a barrel above Brent oil
Current price
WTI   $112.64
Brent  $111.83

With Europe so close to Ukraine war, and in need of raw oil I do not understand what is happening.
Only thing I can think of, European traders think Europe will have demand destruction for oil due to falling economies this summer caused by the war.

[Value Buy]

I put this comment on the stock trading thread, but am moving it here to avoid messing up that game with comments rather than the game being played.

Post by Value Buy on 2 minutes ago:

I am totally flummoxed by the stock market turmoil.
I totally missed this market drop the last two weeks and it was right in front of me. You, or at least me, could see it coming but I was blind to it.
Of course mgmt at Amazon, WMT and Target missed it too.

Now the question is: do we see a total huge market capitulation before it stops, let alone possibly start upward?
Is this due to inflation,or  after effects of the pandemic?

Now the question is: do we see a total huge market capitulation before it stops, let alone possibly start upward?

[Value Buy]

I believe inflation for the typical American household is much higher than the Government numbers.
The consumer is not as flush with money as many economists claim they are. There are numbers coming out that consumers are now putting things on credit cards.
Housing, whether buying at high prices, or rising mortgage rates, or rent is hurting that segment of the population. 
Food inflation is higher than reported. The consumer knows it is.
Gasoline and diesel are important issues. Gasoline for consumers is in front of their eyeballs everytime they drive by a station whether they stop that day or not.
Pick up trucks with $100 fill ups are now common. That is directly from their wallet now.
Diesel is worse and consumers do not ralize it but this can add to another $200 delivery charge to the grocery store for every truck coming from their wholesaler for the big deliveries. The local delivery wholesalers, Frito, bred mom and pop companies may not add a delivery charge, but they raise the peice on the goods to cover their energy inflation costs. Te retailer does the same thing.

This will not end well in the coming weeks.
Some private independent over the road drivers may be forced to sit deliveries out as Diesel becomes too expensive for them to make a living or break even on the deliveries.