General Investing and Economics Discussion - No Politics

SnidelyWhiplash

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Got a new cryptocurrency for you - FLO:

Does not require massive energy consumption to generate coins.

I ain't touching it with a 10 foot pole. But I find that value proposition uniquely interesting.

Looks like the meme stay-at-home and daytrade with stimulus and unemployment payments crowd has picked up on FLO. Tripled in the last week.

 

SnidelyWhiplash

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LibertyTurns

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I don't even see how they calculate the value. You can't purchase it with standard currency. I haven't even seen an exchange that you can purchase it with Bitcoin. I'm not sure where people are buying/selling it.
I don’t have the time to follow these cryptos. I only bought doggie as a joke. Appreciate the commentary on here, but it probably takes months of education to even understand WTF is going on with bitcoin in general. I‘m not sure how you invest in anything bitcoin with serious time invested unless you just like the Vegas aspect of investing.
 

SnidelyWhiplash

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Fed's latest statements and forecasting came out today.

The net-net should be a positive for the stock market, unless it is weary the Fed is totally ignoring its charter to the point it will crash the economy. I don't think the market has gotten to that sentiment yet. But the expectations and commentary to me were interesting.

Of note, it is forecasting 7% GDP growth this year. That may prove to be the single highest growth rate in the last 50-60 years (1984 was 7.2% coming out of stagflation). Also of note, the highest GDP growth in the last 35 years was 4.7% at the height of the dot-com explosion in 1999. So they're forecasting 50% higher growth than the previous record in recent history.

Inflation is currently running at 5%, 2.5x its target.

Its unemployment forecast for the end of the year is 4.5%, which is below what is considered full employment.

And yet, despite all of these factors,
* No increase in interest rates from 0%.
* More printing of money from the treasury. M1 money supply is up $15 Trillion in just the last year, from $4 Trillion to $19 Trillion. (!)
* Commitment to $1.5 Trillion a year of quantitative easing - buying mortgages and other debt out of the market, to keep interest rates artificially low. The Fed currently sits on $8 Trillion of these sorts of assets it has purchased over time.

All these bulletpoints are why I think it should be net positive for the stock market - because we're going to continue to pour gas on an inferno.
 

orientalnc

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The Fed surely believes this growth rate and inflation is very temporary. The buzz I am getting from formal colleagues is that the staff economists at the Fed believe there are serious fundamental weaknesses in the economy right now that will bring us back to reality. One is that the rent moratorium is ending June 30 and consumer debt is already sky high. And the student loan moratorium is ending in September, as will the federal unemployment benefits. These things have been propping up the economy this year. They think 2022 could see this all come to a screeching halt. It is important to remember that we are a consumer based economy.
 

SnidelyWhiplash

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The Fed surely believes this growth rate and inflation is very temporary. The buzz I am getting from formal colleagues is that the staff economists at the Fed believe there are serious fundamental weaknesses in the economy right now that will bring us back to reality. One is that the rent moratorium is ending June 30 and consumer debt is already sky high. And the student loan moratorium is ending in September, as will the federal unemployment benefits. These things have been propping up the economy this year. They think 2022 could see this all come to a screeching halt. It is important to remember that we are a consumer based economy.

The Fed forecast for GDP growth for 2021 is 7.0% and almost 6.0% in 2022. To your point, being a consumer based economy and turning down the spigot on free money, I'm guessing those forecasts prove aggressive. I also am starting to see proof of their forecast that inflation will stall. For example, lumber prices have absolutely tanked over the last month. People have been hoarding things on the supply side, while buyers on the other side started balking at the prices...so now the hoarders are all trying to flood the market selling their inventory. So the market is right sizing. The spigot on free money for a lot of people will also slow down a lot of the speculation in the markets with people able to get paid to daytrade and everything else. So they might end up getting proven right. If they increase interest rates much at all, that will crush the economy - a 1% absolute value increase in mortgages is a 35% increase in the amount of interest people will have to pay each month. A $500,000 loan for example and a 1% increase in interest rates will increase the monthly mortgage payments from $3,000 to $4,000. They're beyond the point of no return on the decision to have not started raising rates gradually a long time ago. So they are all-in on their hopes the market self-cools. We will see!
 

LibertyTurns

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Set low expectations and fail to achieve them. Always a winning plan!

Hey @SnidelyWhiplash hate to tell you but 1% of $500k for a full year is only $5k. Over 12 months that’s a bit more than $400 a month, not $1k. If you’re talking a home loan, the difference between 3 & 4% on a $500k loan is about $380 a month.
 

RonJohn

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Doggie shat in the house again. Down to $0.20
All of the crypto currencies have dropped. China single handedly cut the mining capacity by a lot. Flo mining is now at 300 difficulty, which is less than half what it was a week or two ago. Anyone who happens to have an old mining rig(bitcoin, dogecoin, monero, whatever), getting it running now would probably be a good idea.
 

SnidelyWhiplash

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Incredible, and extremely smart by the company. The company still has no visible path to be a going concern. But to their credit, they have used the Reddit meme stock craze to now successfully raise $1.6 Billion from the sky high valuations. Good on them. Hopefully they'll put it to good use retooling/reimagining the company.

 

SnidelyWhiplash

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This stuff just fascinates me - how much money some people put into this namby pamby thing.


And crypto has been the ultimate pump and dump scheme. Good to see they’re finally going after some of these Reddit meme bosses…although it appears to have cost McAfee his life.

 

RonJohn

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This stuff just fascinates me - how much money some people put into this namby pamby thing.


And crypto has been the ultimate pump and dump scheme. Good to see they’re finally going after some of these Reddit meme bosses…although it appears to have cost McAfee his life.

I don't think crypto is a namby pamby thing. It could be used to replace established banking and money transfer practices. That is what bitcoin was started as.

People are currently speculating on crypto, instead of simply using it as currency. I think that most people who own bitcoin got it as an "investment" instead of getting it to use in a transaction. If people purchased bitcoin to use in transactions, similar to getting 20s out of the ATM to use for purchases it wouldn't be as valuable, but it would be more useful.

The big issues with the story that you posted about the exchange in South Africa are that in many parts of the world crypto exchanges are not regulated the same as banks, and that people trust their holdings with such exchanges that have very little history and/or public confidence. In the South Africa exchange, either the founders had serious security issues which would have been subject to regulations if they were a bank or brokerage, or the founders took all of the holdings and ran.

I would not suggest crypto as a serious investment. If someone does acquire crypto, they should get a local wallet to store the crypto. I haven't seen an exchange that pays interest, so no reason to keep it at the exchange. Make several encrypted copies of the wallet and store them in different locations. (Then be sure to remember the password.)
 

SnidelyWhiplash

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I don't think crypto is a namby pamby thing. It could be used to replace established banking and money transfer practices. That is what bitcoin was started as.

People are currently speculating on crypto, instead of simply using it as currency. I think that most people who own bitcoin got it as an "investment" instead of getting it to use in a transaction. If people purchased bitcoin to use in transactions, similar to getting 20s out of the ATM to use for purchases it wouldn't be as valuable, but it would be more useful.

The big issues with the story that you posted about the exchange in South Africa are that in many parts of the world crypto exchanges are not regulated the same as banks, and that people trust their holdings with such exchanges that have very little history and/or public confidence. In the South Africa exchange, either the founders had serious security issues which would have been subject to regulations if they were a bank or brokerage, or the founders took all of the holdings and ran.

I would not suggest crypto as a serious investment. If someone does acquire crypto, they should get a local wallet to store the crypto. I haven't seen an exchange that pays interest, so no reason to keep it at the exchange. Make several encrypted copies of the wallet and store them in different locations. (Then be sure to remember the password.)

Yea, probably a strong choice of words on my part. But how many times have we seen people lose millions of their own dollars because they lost their password. How many times have people's money been stolen because the holding sites were hacked. How many times have people run off with other people's money they were holding. Then compare that to the traditional banking system.
 

Peacone36

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Question for some of you more savvy traders. I have done fairly well in the market since getting involved last April. Took some lumps and made some bad decisions (mostly due to not knowing how to read things) but also made some good investments.

One of the better investments I have made so far is $PBA which is about 33% in the green since the purchase and pays a nice $0.17 per share per month. I also recently invested in $KMI which is also an energy company.

I was going through their information today and a very loud bell started ringing when I saw that PBA had a P/E Ratio of -47+%!! I know that P/E is often dependent upon industry but KMI currently sits at 22.46. I am not sure how I didn't notice this before but now that I have should I take my earnings and look at other prospects?

Thanks for any advice.
 

SnidelyWhiplash

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Question for some of you more savvy traders. I have done fairly well in the market since getting involved last April. Took some lumps and made some bad decisions (mostly due to not knowing how to read things) but also made some good investments.

One of the better investments I have made so far is $PBA which is about 33% in the green since the purchase and pays a nice $0.17 per share per month. I also recently invested in $KMI which is also an energy company.

I was going through their information today and a very loud bell started ringing when I saw that PBA had a P/E Ratio of -47+%!! I know that P/E is often dependent upon industry but KMI currently sits at 22.46. I am not sure how I didn't notice this before but now that I have should I take my earnings and look at other prospects?

Thanks for any advice.

My 2 cents, which is worth about that month - historically, valuation ratios were critical to buying low and selling high. But look up valuations of Tesla, Amazon, etc. Everything is irrational in that regard right now, and it’s more based on emotion. I wouldn’t necessarily advise selling because something may be “expensive”. It could keep going up. You could think about a stop loss - sell if it drops to a certain point.
 

SnidelyWhiplash

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Another month of massive inflation (2.5x the Fed Target):

And this is even using their fairly muted inflation calculations.

Looks like the economy is calling the Fed's bluff, that they're not interested in increasing interest rates again.
 

RonJohn

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Another month of massive inflation (2.5x the Fed Target):

And this is even using their fairly muted inflation calculations.

Looks like the economy is calling the Fed's bluff, that they're not interested in increasing interest rates again.
I am not sure I trust the current numbers as true indicators of the inflation trend. Used car pricing makes up 1/3 of that increase. In a lot of instances, new cars are pretty much unavailable. People are currently paying more than new car MSRP for used cars. That is ridiculous and isn't sustainable. I am sure the car dealers will try to keep the prices high after new cars are readily available again, but when one dealer starts selling cars more cheaply to get more business, all of them will follow. A year from now, that portion of the inflation numbers will probably be negative. Housing is a portion of the inflation numbers. Construction materials are now deflating. I don't know that housing prices will deflate, but I can see them being stagnant for several years.

The bigger issues with inflation, in my opinion, are wage increases and printed money. Those will cause real inflation, but I don't know that we are actually seeing the effects of those things strongly yet.
 

SnidelyWhiplash

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I am not sure I trust the current numbers as true indicators of the inflation trend. Used car pricing makes up 1/3 of that increase. In a lot of instances, new cars are pretty much unavailable. People are currently paying more than new car MSRP for used cars. That is ridiculous and isn't sustainable. I am sure the car dealers will try to keep the prices high after new cars are readily available again, but when one dealer starts selling cars more cheaply to get more business, all of them will follow. A year from now, that portion of the inflation numbers will probably be negative. Housing is a portion of the inflation numbers. Construction materials are now deflating. I don't know that housing prices will deflate, but I can see them being stagnant for several years.

The bigger issues with inflation, in my opinion, are wage increases and printed money. Those will cause real inflation, but I don't know that we are actually seeing the effects of those things strongly yet.

Printing money is by itself inflation by definition. The way inflation is calculated (as you pointed out w/respect to used cars) is crazy. If a computer doubles its processing power but keeps the cost constant, it represents a 50% reduction in inflation. So there's a lot of other crazy moving parts to how we calculate inflation. I think we also bastardize numbers like wage inflation, because we don't count any of the unemployment/PUA numbers or PPP loans for owners as personal income in this way as it applies to inflation (a lot of people made a lot of extra money last year, but it won't show up in wage inflation numbers). All these things will sort themselves out eventually over time (as you also point out) as comparisons year over year are not now to a wacky shut down period and then we'll really know where we stand. One interesting side point the markets are probably not thinking about is that a 6% GDP growth number doesn't look so good when inflation is almost 6% - that implies that real GDP is basically flat.
 

SnidelyWhiplash

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Ton of economic news today.

Producer Price Increase (PPI) - basically inflation up river further at the supplier point in the chain is up 7.3% year over year. Furthermore, its getting worse, with June over May 1% (13% on an annualized basis) after May over April being 0.8%.

Polling of unemployed for why they are turning down jobs shows that approximately 2 million people have turned down jobs because (in their words) they can make more money by getting paid to not work.

Federal tax revenue through the first 9 fiscal months of the year is now at a huge all time record of over $3 Trillion, growing a whopping 35% year over year. Unfortunately, we as usual can't control our spending and spent a whopping $5.3 Trillion during the same time period :ROFLMAO: . That massive $2.2 Trillion deficit is especially incredible when you consider its only for 9 months and the pandemic has been all but over for most of the country during this time (fiscal year starts October 1st).

This tax revenue data further bolsters the argument that its not the reopening that has led to such high inflation, but rather how much money we've injected into the economy. 35% growth on tax revenue says it all right there. People and companies are absolutely flush with money.
 
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