General Investing and Economics Discussion - No Politics

[Deleted member 2897]

We lost 700k a month for 6 months.

FYI in the hugest ever recession of all time GDP contracted 2%. GDP was $14.712T in 2008 and contracted to $14.448T in 2009. By 2010, GDP expanded 4% to $14.912T completely eliminating the “Great Recession”. The reason it felt so bad for so long was horrendously poor economic policies. Instead of giving the drowning man a life preserver and give him a hand so he could get out of the pool, we handed him a diving belt and a gallon of water, then repeatedly kicked him in the head when he started to climb out.

Here is a visual reminder. The entirety of one of the worst economic periods many people have ever seen was largely over and gone in 12 months. And to your point, I remember some of those policies. At the time, I sold a lot to state and local governments (school districts too). The federal government had for about a year or so a handout to these organizations as long as they didn't lay anybody off. So what happened - those organizations didn't make any investments, because they didn't know how long the money train would roll. So they just froze for about a year, and then when the money didn't renew, only then did they right size their organizations. Had the effect of prolonging the misery because instead of joining with private industry and just taking a bath and getting it done, it turned it into a longer misery trickle.

 

[LibertyTurns]

Worst of all we handed cash to the banks to shore up their balance sheets and have money to loan to jump start the economy. They hoarded the cash, then we loaned more. Then we failed to enact any fiscal policies to encourage businesses to invest as you said. Criminal how we failed to leverage opportunities for the benefit of our nation. We focused on scoring political points and screwed the people.

 

[Deleted member 2897]

Worst of all we handed cash to the banks to shore up their balance sheets and have money to loan to jump start the economy. They hoarded the cash, then we loaned more. Then we failed to enact any fiscal policies to encourage businesses to invest as you said. Criminal how we failed to leverage opportunities for the benefit of our nation. We focused on scoring political points and screwed the people.

Speaking of which, as we have highlighted in the lounge, our federal government has handed out a few trillion in cash as a QE over the last several months to help banks with their liquidity. Here we go again.

 

[CuseJacket]

 

[Deleted member 2897]

Interesting on that 'what happens the next day'. If you add up the numbers and look closely, it looks like the next 1 day is usually a good trading option, but over the next week, month, and three months the market ends up lower on average than before it started. On average, 6 months later, the market is up including everything, about 4% (2 years were down, 7 years were up)...1 of the 9 years it was down -6% and 1 of the 9 years it was down -36%.

 

[LibertyTurns]

@bwelbo Well, might be hitting my threshold for risk tolerance. Got about 25% of my portfolio not in cash, tomorrow I may run for the hills. Not planning on seeing if 2350 holds. 2720 support level held but my patience is running thin.

 

[Deleted member 2897]

@bwelbo Well, might be hitting my threshold for risk tolerance. Got about 25% of my portfolio not in cash, tomorrow I may run for the hills. Not planning on seeing if 2350 holds. 2720 support level held but my patience is running thin.

Well if you’re like me and you’d like to see the market go back up, just sell something.

 

[CuseJacket]

Following tonight's news conference, stock market futures flipped from 1.5% in the red to 2% in the green

 

[Deleted member 2897]

For those keeping track at home, today's result (+4.89%) was 3rd best out of the previous 9 day-before crashes:



On average we should expect about a +1.0% increase over the next week but a -1.0% over the next month, and about a wash over the next 3 months. Historically speaking, its been a coin flip over the next month as to whether or not the market goes up or down.

My personal belief is that this time is a bit different from the others. Unlike most of the others, we're in a recession that hasn't been publicly confirmed yet. Mid-2008 was similar to to now in that regard.

 

[CuseJacket]

On average we should expect about a +1.0% increase over the next week but a -1.0% over the next month, and about a wash over the next 3 months. Historically speaking, its been a coin flip over the next month as to whether or not the market goes up or down.

My personal belief is that this time is a bit different from the others. Unlike most of the others, we're in a recession that hasn't been publicly confirmed yet. Mid-2008 was similar to to now in that regard.

1 month out is 75% green, avg 3% gain which is solid for 1 month. The 1 month data's also interesting in that the one extreme red scenario is 2 months prior to the subsequent most extreme green scenario. 2008. Recession.

I don't think we were in a recession when you called it, and I think it's questionable as of today. The fundamentals were still strong a month ago, and I don't think it tips over on a dime. I think the current correction is due to the virus and reaction to the virus. Further actions - right, wrong or otherwise - could tip us over the edge into a recession and the clock is ticking now.

 

[Deleted member 2897]

1 month out is 75% green, avg 3% gain which is solid for 1 month. The 1 month data's also interesting in that the one extreme red scenario is 2 months prior to the subsequent most extreme green scenario. 2008. Recession.

I don't think we were in a recession when you called it, and I think it's questionable as of today. The fundamentals were still strong a month ago, and I don't think it tips over on a dime. I think the current correction is due to the virus and reaction to the virus. Further actions - right, wrong or otherwise - could tip us over the edge into a recession and the clock is ticking now.

The next week and next month includes the next day. In other words, take the next week and next month and subtract today if you want to see on average what is coming (if the future imitates the past).

In terms of a recession, I just don’t see how you disrupt supply chains and slash 2-way international demand, cancel events and travel everywhere and avoid a recession. The good news is I would think it would not last long unless it sets off a debt crisis or something for companies. But I think the federal government will pilfer the treasury again to throw money around to try and stave that off. They’ve also been handing the banks a few trillion over the last several months with their repo/QE, which should help.

 

[CuseJacket]

The next week and next month includes the next day. In other words, take the next week and next month and subtract today if you want to see on average what is coming (if the future imitates the past).

In terms of a recession, I just don’t see how you disrupt supply chains and slash 2-way international demand, cancel events and travel everywhere and avoid a recession. The good news is I would think it would not last long unless it sets off a debt crisis or something for companies. But I think the federal government will pilfer the treasury again to throw money around to try and stave that off. They’ve also been handing the banks a few trillion over the last several months with their repo/QE, which should help.

Gotcha, makes sense on the day/month timing. Hadn't interpreted it that way before.

As for events getting canceled, that didn't happen until < 3 weeks ago. That's when the market dropped. Maybe there's still lack of accounting in the market for supply chain issues that would have in theory started 3 months ago, but I'm not sure. The virus was known months ago. China's production has increased again, while both China and South Korea seem to have the virus in the rear view (relatively speaking).

I really don't have a good pulse and see both sides. My wife insists that more bad things will come, but not due to supply and demand. She believes the upcoming testing for the virus in the U.S. and the subsequent mistreatment of information will cause greater psychological damage than is currently priced in. She is a therapist, so she's at least somewhat qualified on that assertion. Therefore, more extreme measures will be taken in the public and private sector that will shin kick the economy, and we'll end up in a recession. That theory also makes sense.

 

[Deleted member 2897]

Gotcha, makes sense on the day/month timing. Hadn't interpreted it that way before.

As for events getting canceled, that didn't happen until < 3 weeks ago. That's when the market dropped. Maybe there's still lack of accounting in the market for supply chain issues that would have in theory started 3 months ago, but I'm not sure. The virus was known months ago. China's production has increased again, while both China and South Korea seem to have the virus in the rear view (relatively speaking).

I really don't have a good pulse and see both sides. My wife insists that more bad things will come, but not due to supply and demand. She believes the upcoming testing for the virus in the U.S. and the subsequent mistreatment of information will cause greater psychological damage than is currently priced in. She is a therapist, so she's at least somewhat qualified on that assertion. Therefore, more extreme measures will be taken in the public and private sector that will shin kick the economy, and we'll end up in a recession. That theory also makes sense.

Yea, and on top of that, the stock market doesn’t have to move in that certain direction either. In other words, if we have a recession and it’s short or mild, the stock market could actually go up. With every passing day that the virus looks more like a bad Flu outbreak, that helps too. So much of the hysteria is from the media and just feeds on itself. The perception of people from the media can create a self-fulfilling prophesy in either direction.

 

[LibertyTurns]

Maybe I’m just mistaken but there seems to be some attempts at reconciling economic performance with stock market action. Each can have an effect on the other, but neither necessarily affects the other.

 

[Techster]

Higher pain tolerance, or drink more...

 

[LibertyTurns]

Higher pain tolerance, or drink more...

This is where investing psychology is real important. I think you posted the article on Dalio. People say “I’m in it for the long haul”, “I’m a buy and holder”, etc but then they wander around all day checking their 401k value every 30 mins. You have to understand your own risk tolerance and operate within your particular levels. Besides taking care of your physical medical situation & attending to your family then possibly community service if you’re interested in giving back, that leaves your your financial health probably #3 or #4 on the list of the most important things in life. Yet people gaff off financial decisions to hired guns with little thought about what that person is doing or blindly invest because some yapping head says some stock is hot or just dumped money into a 401k because some co-worker yacked about something. Crazy.

 

[CuseJacket]

This is where investing psychology is real important. I think you posted the article on Dalio. People say “I’m in it for the long haul”, “I’m a buy and holder”, etc but then they wander around all day checking their 401k value every 30 mins. You have to understand your own risk tolerance and operate within your particular levels. Besides taking care of your physical medical situation & attending to your family then possibly community service if you’re interested in giving back, that leaves your your financial health probably #3 or #4 on the list of the most important things in life. Yet people gaff off financial decisions to hired guns with little thought about what that person is doing or blindly invest because some yapping head says some stock is hot or just dumped money into a 401k because some co-worker yacked about something. Crazy.

Financial illiteracy is real. Another issue perpetuated by quick hits in the 24 hour news cycle.

Ex: Worst drop in DOW history of over 2,000 points!

Reality? Not even a top 10 drop by percentage, which, ya know, is what actually matters.

I don't think I'm being cynical when I say that I think the gap in financial literacy is intentional. Too much money on the table and folks/businesses seeking an edge. That's why you need to take it into your own hands, as you suggest, otherwise even the surface-level retail advice can be damaging. (Disclaimer: that's not meant to be a blanket statement of all content out there)

 

[Deleted member 2897]

Financial illiteracy is real. Another issue perpetuated by quick hits in the 24 hour news cycle.

Ex: Worst drop in DOW history of over 2,000 points!

Reality? Not even a top 10 drop by percentage, which, ya know, is what actually matters.

I don't think I'm being cynical when I say that I think the gap in financial literacy is intentional. Too much money on the table and folks/businesses seeking an edge. That's why you need to take it into your own hands, as you suggest, otherwise even the surface-level retail advice can be damaging. (Disclaimer: that's not meant to be a blanket statement of all content out there)

I agree. And if you’re financially literate, you can make a ton of money by doing the opposite of what the masses do... Whether that’s investing, or just how you save and manage your money day to day.

 

[Techster]

Remember, cash is king. Companies with the most cash will be able to weather the oncoming train:

 

[Jim Prather]

So Berkshire Hathaway is about to make a killing!