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Post by missouriboy on Aug 12, 2022 6:57:59 GMT
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Post by duwayne on Aug 12, 2022 20:41:32 GMT
ZeroHedge had this within an article yesterday.
“While stocks did manage in early trading to break above the closely watched level of 4,220 which is the 50% Fib retracement - which matters as there has never been a bear market rally that closed above the 50% fib that subsequently went on to make new lows - the rally fizzled shortly after the open and spoos drifted lower all day, eventually closing below the critical support level.”
Today the S&P closed above the fore-mentioned 4220 level. Stocks could fall some from here, but anything more than a 13% drop from this recovery point would be unprecedented.
A review of my market moves this year including my comments at the time follows.
Early in the year I sold at 3% below the market all-time high because among other things, it was “time for the market to undergo a drop of at least 10%”. Later in the year I bought (“caught a falling knife”) when the market had dropped 20% from the peak. I “expected the market drop to be limited to no more than the 20-30% drop typical of a normal recession.” The down move from when I sold and then bought was 18%. Since then, the market is up 12% for a total of 30% (down plus up) while the overall market is currently down around 10% from its all-time high.
I retained much of my equity position throughout this period as “I am on the optimistic side as an investor because the S&P 500 including dividends reinvestment has gone up by a compounded rate of 11% for the period 1950-2021. I only sell heavily when I am expecting the market to fall more than the 20-30% fall resulting from a typical recession”. The maximum market drop this year from its all-time high was 25.5%.
So I ask myself, even as bad as things might look concerning a recession, etc. does it make sense to sit by with a likely target max of 13% loss based on history when the stock market historically has gone up 11% per year on average?
I write these summaries because writing my thoughts down helps me crystalize my thinking and making a “public” exposure of what I am doing helps keep me from making moves without careful analysis.
Anything I write should not be viewed as a recommendation for you to follow. Make your own decisions. |
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Post by Sigurdur on Aug 13, 2022 0:50:25 GMT
The National Debt will soon be playing a large role in investor confidence
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Post by walnut on Aug 13, 2022 2:06:29 GMT
I want to study up on the "quantitative tightening". I think that it mainly amounts to letting bonds on the balance sheet expire, and disappear. There are Treasuries and mortgage backed bonds. Need to understand better. I think that generally the effect on the money supply will be nothing, in the case of Treasuries, or small in the case of MB bonds. If I didn't know better, I'd say that they almost seem to be trying to make this process a little unclear.
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Post by Sigurdur on Aug 13, 2022 2:17:09 GMT
Bonds on the Balance sheet may expire, but they won't disappear. They will be repaid with new bonds.
Quanative tightening means the Fed will not lend as much at LIBOR rates.
An important point to remember is the Fed is a private bank. Believe me, they have NO intention of losing money.
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Post by walnut on Aug 13, 2022 2:22:42 GMT
ZeroHedge had this within an article yesterday.
“While stocks did manage in early trading to break above the closely watched level of 4,220 which is the 50% Fib retracement - which matters as there has never been a bear market rally that closed above the 50% fib that subsequently went on to make new lows - the rally fizzled shortly after the open and spoos drifted lower all day, eventually closing below the critical support level.”
Today the S&P closed above the fore-mentioned 4220 level. Stocks could fall some from here, but anything more than a 13% drop from this recovery point would be unprecedented.
A review of my market moves this year including my comments at the time follows.
Early in the year I sold at 3% below the market all-time high because among other things, it was “time for the market to undergo a drop of at least 10%”. Later in the year I bought (“caught a falling knife”) when the market had dropped 20% from the peak. I “expected the market drop to be limited to no more than the 20-30% drop typical of a normal recession.” The down move from when I sold and then bought was 18%. Since then, the market is up 12% for a total of 30% (down plus up) while the overall market is currently down around 10% from its all-time high.
I retained much of my equity position throughout this period as “I am on the optimistic side as an investor because the S&P 500 including dividends reinvestment has gone up by a compounded rate of 11% for the period 1950-2021. I only sell heavily when I am expecting the market to fall more than the 20-30% fall resulting from a typical recession”. The maximum market drop this year from its all-time high was 25.5%.
So I ask myself, even as bad as things might look concerning a recession, etc. does it make sense to sit by with a likely target max of 13% gain based on history when the stock market historically has gone up 11% per year on average?
I write these summaries because writing my thoughts down helps me crystalize my thinking and making a “public” exposure of what I am doing helps keep me from making moves without careful analysis.
Anything I write should not be viewed as a recommendation for you to follow. Make your own decisions. Right now is a chance to buy growth stocks at somewhat more reasonable prices, and almost feel like an actual equity investor based on discounted cash flow valuations. We haven't seen that since the pandemic crash. And previous opportunities had been years before that. I got in right around the low.
I've observed several big corrections by now, and I have learned to BUY when others are citing bearish scenarios during a sell-off. It is how this country is set up. You have to own equity in a business to get ahead, either your own, or someone else's.
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Post by walnut on Aug 13, 2022 2:23:51 GMT
Bonds on the Balance sheet may expire, but they won't disappear. They will be repaid with new bonds. Quanative tightening means the Fed will not lend as much at LIBOR rates. An important point to remember is the Fed is a private bank. Believe me, they have NO intention of losing money. Repaid to who? When the lender and the borrower are the same person, Uncle Sam?
I think that the bonds simply vanish, but the M2 stays in the hands of Morgan Stanley, Goldman Sachs, and Bank of America.
We can't really think that they are going to actually pull money out of the market, after working so hard to print it?
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Post by Sigurdur on Aug 13, 2022 4:17:24 GMT
Money is a medium of exchange. The value of money is established by a physical asset.
The Fed Reserve has been granted the power to lend money, not from deposits but by printing it. When they lend money, they exchange it for bonds, etc.
The physical asset doesn't disappear.
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Post by walnut on Aug 13, 2022 4:28:06 GMT
The Fed issued Treasury bonds, establishing a debt owed by the US govt. Then the Fed printed by a computer keystroke, money to buy those bonds back. At that point, the bonds effectively disappeared, the Fed having terminated their own debt. The bonds remain on the Fed balance sheet, a meaningless gesture to maintain a semblance of legitimacy. The money that was printed remains in the economy.
It is an obviously fraudulent scheme, a crime against all who hold US dollars or dollar denominated debt. Imagine a business owner arbitrarily editing his own balance sheet like that and publishing it for investors or lenders.
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Post by nonentropic on Aug 13, 2022 6:14:35 GMT
As I am old and did economics when Milton Friedman was a bit of a celebrity, there was much debate about money supply being a wrongly understood thing.
We had a prof put up his equation where the centerpiece was the multiple of Money supply and money velocity and from that he indicated that monetarism as a method of restraining inflation was bogus.
Much has happened in the intervening 40 years but he was at least partially wrong inflation fell when money supply was constrained but in the background, I have this concern about money velocity.
what drives the velocity? My suspicion is that real and actual interest rates are a driver.
dinner!
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Post by gridley on Aug 13, 2022 10:29:21 GMT
Money is a medium of exchange. The value of money is established by a physical asset. The Fed Reserve has been granted the power to lend money, not from deposits but by printing it. When they lend money, they exchange it for bonds, etc. The physical asset doesn't disappear. The value of money USED to be established by a physical asset. US currency is no longer so tied. If you think I'm wrong, what physical asset can you trade for the EXACT amount of US dollars you could have traded for it one, three, and five years ago? What physical asset (bonds aren't physical asset) does the .gov guarantee its dollars can be traded for at a set price?
The US dollar still has some value, but it is itself a commodity, and its value fluctuates rapidly. For the moment it remains a valuable commodity, but there is nothing INHERENT about it that ensures it will continue to be.
Now, there is one thing about US currency that is notable: the US has never demonetized any of the currency it issued. Yes, bills and coins have been redesigned over the years and old bills are destroyed and replaced periodically, but a 100 year old printed bill can still be traded in for its face value. Try doing that in the UK and see how far you get. As the dollar continues to fall I expect that will eventually change.
Food, by contrast, is and always will be a valuable commodity because if worst comes to worst you can eat it.
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Post by duwayne on Aug 13, 2022 14:15:27 GMT
ZeroHedge had this within an article yesterday.
“While stocks did manage in early trading to break above the closely watched level of 4,220 which is the 50% Fib retracement - which matters as there has never been a bear market rally that closed above the 50% fib that subsequently went on to make new lows - the rally fizzled shortly after the open and spoos drifted lower all day, eventually closing below the critical support level.”
Today the S&P closed above the fore-mentioned 4220 level. Stocks could fall some from here, but anything more than a 13% drop from this recovery point would be unprecedented.
A review of my market moves this year including my comments at the time follows.
Early in the year I sold at 3% below the market all-time high because among other things, it was “time for the market to undergo a drop of at least 10%”. Later in the year I bought (“caught a falling knife”) when the market had dropped 20% from the peak. I “expected the market drop to be limited to no more than the 20-30% drop typical of a normal recession.” The down move from when I sold and then bought was 18%. Since then, the market is up 12% for a total of 30% (down plus up) while the overall market is currently down around 10% from its all-time high.
I retained much of my equity position throughout this period as “I am on the optimistic side as an investor because the S&P 500 including dividends reinvestment has gone up by a compounded rate of 11% for the period 1950-2021. I only sell heavily when I am expecting the market to fall more than the 20-30% fall resulting from a typical recession”. The maximum market drop this year from its all-time high was 25.5%.
So I ask myself, even as bad as things might look concerning a recession, etc. does it make sense to sit by with a likely target max of 13% gain based on history when the stock market historically has gone up 11% per year on average?
I write these summaries because writing my thoughts down helps me crystalize my thinking and making a “public” exposure of what I am doing helps keep me from making moves without careful analysis.
Anything I write should not be viewed as a recommendation for you to follow. Make your own decisions. I incorrectly wrote in my original post "likely target max of 13% gain". That should have been likely max loss possibility of 13% while historically the stock market has increased at 11% per year. I've changed that in the post.
The market might bounce around for a while.
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Post by walnut on Aug 13, 2022 14:53:36 GMT
ZeroHedge had this within an article yesterday.
“While stocks did manage in early trading to break above the closely watched level of 4,220 which is the 50% Fib retracement - which matters as there has never been a bear market rally that closed above the 50% fib that subsequently went on to make new lows - the rally fizzled shortly after the open and spoos drifted lower all day, eventually closing below the critical support level.”
Today the S&P closed above the fore-mentioned 4220 level. Stocks could fall some from here, but anything more than a 13% drop from this recovery point would be unprecedented.
A review of my market moves this year including my comments at the time follows.
Early in the year I sold at 3% below the market all-time high because among other things, it was “time for the market to undergo a drop of at least 10%”. Later in the year I bought (“caught a falling knife”) when the market had dropped 20% from the peak. I “expected the market drop to be limited to no more than the 20-30% drop typical of a normal recession.” The down move from when I sold and then bought was 18%. Since then, the market is up 12% for a total of 30% (down plus up) while the overall market is currently down around 10% from its all-time high.
I retained much of my equity position throughout this period as “I am on the optimistic side as an investor because the S&P 500 including dividends reinvestment has gone up by a compounded rate of 11% for the period 1950-2021. I only sell heavily when I am expecting the market to fall more than the 20-30% fall resulting from a typical recession”. The maximum market drop this year from its all-time high was 25.5%.
So I ask myself, even as bad as things might look concerning a recession, etc. does it make sense to sit by with a likely target max of 13% gain based on history when the stock market historically has gone up 11% per year on average?
I write these summaries because writing my thoughts down helps me crystalize my thinking and making a “public” exposure of what I am doing helps keep me from making moves without careful analysis.
Anything I write should not be viewed as a recommendation for you to follow. Make your own decisions. I incorrectly wrote in my original post "likely target max of 13% gain". That should have been likely max loss possibility of 13% while historically the stock market has increased at 11% per year. I've changed that in the post.
The market might bounce around for a while.
Yes that definitely confused me |
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Post by duwayne on Aug 13, 2022 18:42:19 GMT
Walnut, you certainly bought at a good price. I'm curious if the funds you invested came from selling stock previously at a high price. And if so, how did you decide it was a good time to sell? And while I'm asking, how did you decide it was a good time to buy?
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Post by walnut on Aug 13, 2022 22:08:56 GMT
I had just accumulated some money while business was good. I used to actively trade, but I have decided to be an 'investor'. That development took a long time for me. I watch a couple of indicators over different time scales which incorporate stochastics with volume. While nothing is foolproof, I have come to have some confidence in these. The trickiest part is scaling the size of the market move to the correct time scale on the indicators. It's like watching waves coming onto a beach, and trying to decide how large a big one will be. A one hour indicator might take 2 or 3 days to roll over, but in the case of a big correction, you needed to be watching the daily indicator to get a better feel for the scale of the move.
They say, don't even try to time the market. However, I don't particularly agree with that. If you can buy low it obviously helps a great deal.
One other thing- I think it is a little easier to call a bottom than to call a top, which is basically impossible. |
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