Investing General Discussion

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Blazin

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Gurgeh said:
a lot of people are anticipating a lot of inflation at some point in the next decade.
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No they aren't. In fact we may be hitting a peak never before seen in modern times of no inflation fear. We may be near a top in that cycle but it's decades long and calling its top is fool hearty. Long term bond rates show you there is no inflation fear. Don't understand how you guys connect to your dots on some of this stuff.

Bond prices consist of two elements, risk and inflation expectations, we just had the lowest 30yr auction yield in history and you are talking about people anticipating inflation. Right now nobody can conceive of higher inflation and higher rates.
 
Gurgeh

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We're not talking regular inflation, we're talking a massive crash when the monetary bubble burst. Maybe it won"t happen, maybe only in China, or just China, EU, or maybe everyone, maybe next year or in five. It's hard to look at the monetary supply and not think "it's gonna end badly". This shit isn't going to be priced like regular inflation "oh I think we're going to get an increase of 0.2% inflation next year".

I don't know much about the USA, but in France it's very clear, even for regular people. This year was a record high rental investment, everyone in the middle uper class and above are buying like mad overpriced houses to rent them, often with a less than 1.5% gross return, meaning a significantly negative return after taxes, and yet people are rushing into it. PER in the stockmarkets are quite bad as well, they are in the "should be crashing soon" area, and people keep buying, and we could very well consider that a PER of 40 is "normal" for while. Even gold is close to its highest.

It's very unusual to have everything being so expensive simultaneously. Did it ever happen before ?

The bottom line is that we don't really know how to deal with that, but it's hard to believe it can keep going forever :
USA M1
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China M1
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EU M1
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Money supply is increasing vastly more than when we had growth and inflation...
 
Furry

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There's no situation in history to really compare the current happenings too. The fact that all this money dumping seems to be causing artificial inflation in some areas and not in others is likely not permanently sustainable. It feels like the governments are trying to force a bit of inflation into the markets on broader terms and people with the money aren't buying the right things.

The wheels gotta pop off at some point, but it's really hard to know where it will happen. The teat of free money dries up and there's a sudden massive liquidity crunch? Too much money in investments causes rates of return to go down on broader terms leading to a capital crash? Hyperinflation at some point if costs for these investments gets passed on?

Any one of these could be where it starts, and it could be nothing happens. The current situation with how some countries are treating money is just odd. As stated before, I think europe is in a particularly poor place to deal with the fallout financially if there is one.
 
Sanrith Descartes

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Furry said:
The wheels gotta pop off at some point, but it's really impossible to know where it will happen.
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Ftfy.
It is going to happen. No one can know when. Liquidity can freeze up in a heartbeat. The speed with which the algos and hft's can execute trades is going to exacerbate it when it occurs. It will start with the dip buyers who have been programmed by a lack of consequences to buy, buy, buy each dip. Once the bids dry up its gonna be a rush to the door and the hft's get a 10 minute head start. I think the next step will be the CNBC folks calling it a "flash crash" and the dip buyers will try again. The market will close down 10-ish % over a day or three. If there is no liquidity there will be no bids in significant numbers.

CNBC will break out the "markets in crisis" logo in hope that it will fix things.

At this point we are at an inflection point. Does the Fed start buying? Does liquidity re-appear? Who knows. I sure dont. I do know that a lot of market capital is tied up in an extremely small number of companies. What happens if Apple says its supply chain is so disrupted it is adjusting its forward guidance significantly downward? Or Google gets sued by the DOJ under the Sherman Anti-trust Act?
 
Furry

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Sanrith Descartes said:
Ftfy.
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I do think a liquidity crunch is the most likely outcome leading to a market crash. Historically markets have been the most reactionary of investments, and the speed of them now only makes that far more extreme. There are a lot of companies, especially tech ones, with absurd valuations. We've come close to a crunch a few times, but the flow of money from other countries into the US and liquidity being injected into the market has been enough to sustain it for now.

A major company taking a big hit could be all it takes to have a big amount of perceived value vanish with a catastrophic fallout. I think the fed knows they have to reign this in a bit, but isn't really sure how to do it without setting off the panic themselves. The major reason this has been allowed to go on so long is that everyone feels good about the economy, because a lot of the numbers ARE good. And that perception is what holds everything up.
 
Sanrith Descartes

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Furry said:
I do think a liquidity crunch is the most likely outcome leading to a market crash. Historically markets have been the most reactionary of investments, and the speed of them now only makes that far more extreme. There are a lot of companies, especially tech ones, with absurd valuations. We've come close to a crunch a few times, but the flow of money from other countries into the US and liquidity being injected into the market has been enough to sustain it for now.

A major company taking a big hit could be all it takes to have a big amount of perceived value vanish with a catastrophic fallout. I think the fed knows they have to reign this in a bit, but isn't really sure how to do it without setting off the panic themselves. The major reason this has been allowed to go on so long is that everyone feels good about the economy, because a lot of the numbers ARE good. And that perception is what holds everything up.
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I am not at all a person who says the market is in bad shape. Our economy (relative to the rest of the globe is strong). I am concerned about metrics like class 8 truck sales plunging the last year or so. With the production time of those products, we are going to feel the impact for a few quarters yet. Container shipping metrics arent great either. There are factors I see that are indicating a slowdown coming. And that is natural this long into an expansion.

I am concerned we don't know the impact of so much money being tied up in cap weighted SP500 index ETFs when a correction comes. How much is it going to create a harder crash? I'm concerned about leverage levels.

All that being said, I still believe the market is the best place for money. I am also a guy who doesnt fear a correction.
 
Gurgeh

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Sanrith Descartes said:
I am not at all a person who says the market is in bad shape. (...)

All that being said, I still believe the market is the best place for money. I am also a guy who doesnt fear a correction.
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I kinda agree with, the market, the private sector in general is quite robust in the USA and even in the west in general. It's more problem of our government that had been mostly useless, let the CBs deal with the economy. And the only thing a CB can do is print money, so any time we had a problem they printed money. Now we've got a bunch of it just lying around, doing nothing, so you can borrow it nearly for free. And we've become addicted to it, so there is no slowing down in the printing of money.

I don't think there's anyway to reduce that money supply in a finite time without causing a lot of inflation, so at some point, that bubble will burst. When it happens you don't want to have any cash, because, the rest isn't doing so poorly, so its real value won't drop much, as the rent you get from your house or the dividend you'll get from your stocks will still get you the same number of hamburgers, but your cash might have been reseted.

This is also when I cared about that, that I made my posts in this thread regarding ETFs, starting to read the doc, and didn't like what I saw (counterparty risks and synthetic ETFs mainly), because I'm not fearing much for industries, services, housing market... but there's no way it won't be bloody for banks and if banks start going down, so will ETFs unfortunately, because of that counterparty risk (they can/are lending their shares, some ETFs allow themselves to lend up to 80%)

So for me, factoring that risk didn't change much my investments, just switched from ETFs to direct ownership of shares (meaning if the bank go down, the shares are in my name, they can't sell them, nor lend them and lose them...). So for me it's just business as usual, except that I'm being especial cautious about owning as directly as possible my stuff, because fuck knows what will happen if the current money basicaly becomes worthless at some point, what will matter is what you will own. And honestly even if nothing ever happen in my lifetime, that's a cheap insurance.
 
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LachiusTZ

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Gravel Gravel

I've taken finance. Lol

Just impressive, given what I know about you from posting here, to have 15 million saved by your early to mid 30s.

Fucking hat off dude, with out a game changer like ivy league education or landing a near 7 figure job, that is wildly impressive.
 
Sanrith Descartes

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We will be told by the talking heads how this is already priced in and the open will be 50 basis points up.

 
Furry

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The fundamental shakiness is definitely much more apparent in the Eurozone. I think they're entering the stage where they really need to release on some regulations and invest in putting some industry back in the euro through subsidy in order to reverse the greater trend. Even germany is starting to hit the point where they will be running a deficit within a year, and it's the only country that is really in a place to prevent the eurozone from entering a greater calamity, as the outlook in most of the other countries is substantially worse.

However, I expect none of the proper actions to happen. They will try to raise the economy by investing in green energy and other such sustainable nonsense.
 
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Gravel

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LachiusTZ said:
Gravel Gravel

I've taken finance. Lol

Just impressive, given what I know about you from posting here, to have 15 million saved by your early to mid 30s.

Fucking hat off dude, with out a game changer like ivy league education or landing a near 7 figure job, that is wildly impressive.
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Jesus, I hope you just tagged the wrong person here.
 
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sadris

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Hyperinflation is always a political event. Not a monetary one. The public loses faith in the currency before the money printing "ruins"it. It was already ruined.
 
brekk

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So I'm looking for a general opinion on home buying. Yes, I know there's a thread for house buying that feels very housing focussed and I'm more concerned from a macro level.

Is it better to buy-in now at 4'ish% mortgage rate, or in a reasonable timeline (less than 12-24 months) is there is going to be a crash/recession/adjustment leading to lower rates? As is, I'm terrified of the housing price implications of millions of boomers dumping oversized houses on the market as they enter retirement and begin to downsize. I feel like that glut of houses combined with a lack of millenial demand/ability to purchase will lead to the entire market devaluing. I don't want to buy a $250,000 house (~1500 sqft in CT) turning into a $150,000 house as boomers get desperate in unloading 3,000+ sqft. homes.
 
Furry

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sadris said:
Hyperinflation is always a political event. Not a monetary one. The public loses faith in the currency before the money printing "ruins"it. It was already ruined.
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All stocks, money and investment instruments are perceived value, it is the very definition of money, though we often forget it.

Take Tesla. The stock is retardedly overpriced. I looked at it the other day, and if they continue their revenue growth, the stock may be at a proper P/E ratio in something of the order of a couple centuries. There is basically no reason to invest in tesla at its current value. That said, would I short Tesla? No. There's a lot of retarded people in west coast cities who are pouring hopium in it. It's basically the Star Citizen of companies. Because they think its the best thing ever, the stock stays high.

That's just the way the market works.
 
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Furry

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brekk said:
So I'm looking for a general opinion on home buying. Yes, I know there's a thread for house buying that feels very housing focussed and I'm more concerned from a macro level.
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Depends on how deadly and widespread it ends up being. Less than 1% of US dying likely wont have much of an effect on housing prices. Greater than 1% could decrease home values in some urban areas. Greater than 5% will likely reduce home prices in some areas a lot concentrated toward urban end of the spectrum.

I believe the spanish flu had around a .5% fatality rate in the US and I don't believe it had much impact on housing prices, though I've not researched it well.
 
Sanrith Descartes

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brekk said:
So I'm looking for a general opinion on home buying. Yes, I know there's a thread for house buying that feels very housing focussed and I'm more concerned from a macro level.

Is it better to buy-in now at 4'ish% mortgage rate, or in a reasonable timeline (less than 12-24 months) is there is going to be a crash/recession/adjustment leading to lower rates? As is, I'm terrified of the housing price implications of millions of boomers dumping oversized houses on the market as they enter retirement and begin to downsize. I feel like that glut of houses combined with a lack of millenial demand/ability to purchase will lead to the entire market devaluing. I don't want to buy a $250,000 house (~1500 sqft in CT) turning into a $150,000 house as boomers get desperate in unloading 3,000+ sqft. homes.
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No one can give you an answer to this. No one knows. If I did, I would be spending my billions to make myself President.

I will say mortgage rates right now are quite good in a historical sense. 2008 - 2014 was an anomaly. Dont look at it as a comparison event. 3.5 -3.75 % over 30 years is good.

As for house values... use the magic 8-ball. No one knows. Find a house you like, at a price you are happy with and be done with it. As long as you are happy with it and it is within your budget are the biggest factors.
 
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