OT - Dow plunges 1,175 - worst point decline in history

[verticaldoug]

Originally Posted by C40_guy

Yes, saw that in a filing earlier this year. They split in the spring...

Doug, I don't understand something. I bought shares of Trine Acquisition Corp, which then acquired Desktop Metals. Now I own the same number of shares of DM, which is to be expected, and yielding a 50% return on an investment held for three months.

However, TRINE_u is still trading, and I received no shares of it. Is Trine operating like a PE firm, spinning off multiple holdings? I kinda assumed that these blank check companies would be one and done situations.

Just found another one, btw, STIC.U, which is expected to take BarkBox public. An interesting play given the current puppy mania...

Sorry, I don't check this thread often. What was the sedol or ISIN for TRINE_u. I am not sure what entity you are referring to.

[oldpotatoe]

Originally Posted by morrisond

Have you ever heard the expression - "Buy on Rumor - Sell on News"?

The markets may continue higher for some time (and there still may be profits to be made) but if you expect to make much money on a go forward basis from these levels over the long term (10 Years) you are probably SOL. The valuations are absolutely insane. The same thing happened in 2000.

From 2000-2003 the Nasdaq declined by about 82% from Peak to trough. It took until about 2015 for Investors who held at that peak in 2000 to get back to even.

When we get to extremes you always want to buy what people hate. Back last March - people hated stocks - it was a great time to buy. Now almost everyone loves them(stocks) - which means almost no one left to buy.

Just like back in March there is one asset class right now that people absolutely hate and are convinced will fall in value. This asset was a great buy at this time last year as well. If you have never looked at it before you should consider it as a way to diversify a portfolio and protect yourself if we get a violent or prolonged sell-off.

Like I said, don't know diddly about the market..I let my 'guy' figure it out. trump just messaged(his twitter acct is frozen, for now) that he will commit to an 'orderly' transition..I'm 'betting' that it will help the market today..which is what the person asked.

After 2 very good days in the market, I'm anxious to see how it reacts to the "insurgence" on our Capital this afternoon. I spent the afternoon buying software companies.

[morrisond]

Originally Posted by oldpotatoe

Like I said, don't know diddly about the market..I let my 'guy' figure it out. trump just messaged(his twitter acct is frozen, for now) that he will commit to an 'orderly' transition..I'm 'betting' that it will help the market today..which is what the person asked.

Sorry - I wasn't really responding to you with my rant - just using your quote to make a point about "Buy on Rumor - Sell on News" - I should have quoted m2Gride.

The disruptions may still be going on for a bit though until Inauguration Day when the news is over and Trump is gone. Let us just hope Inauguration Day is peaceful and not like the last one.

[makoti]

Originally Posted by morrisond

Sorry - I wasn't really responding to you with my rant - just using your quote to make a point about "Buy on Rumor - Sell on News"

The disruptions may still be going on for a bit though until Inauguration Day when the news is over and McSnuffles is gone. Let us just hope Inauguration Day is peaceful and not like the last one.

Given yesterday, I'm not hopeful

[mg2ride]

Originally Posted by morrisond

Just like back in March there is one asset class right now that people absolutely hate and are convinced will fall in value. This asset was a great buy at this time last year as well. If you have never looked at it before you should consider it as a way to diversify a portfolio and protect yourself if we get a violent or prolonged sell-off.

Would be very interested in knowing what this is.

[zap]

Originally Posted by steveandbarb1

I thought the markets would be expecting a split authority but instead bulled after the 2 Georgia D senators won. Now totally confused what to do with my money on the sideline since start of the pandemic.

Manchin.

What to do? Some assets are undervalued but with the economy expected to recover......movement has already begun.

[kppolich]

Originally Posted by mg2ride

Would be very interested in knowing what this is.

probably gold

[mg2ride]

Originally Posted by kppolich

probably gold

I was guessing Oil or Airlines. I'm in both already. I understand the Gold market even less than the stock market so it intimidates me. Gold was down recently.

[MattTuck]

It should be noted that when talking about prices being up or down, that is relative to the currency that price is denominated in.

The US dollar has weakened significantly over the last year. Some of the recovery in asset prices can be attributed to growth in the money supply. Honestly, I'm not sure what else it can be attributed to.

[morrisond]

Originally Posted by mg2ride

Would be very interested in knowing what this is.

30 Year US Treasuries.

If you had bought them last year at this time at a Yield of 2.36% and sold them when rates bottomed on March 9, 2020 at .702% you would have had a gain of about 42.7%.

Right now 30 Year US Treasuries are at about 1.86%. In a stock market selloff and or the economy stagnates you could easily see the yield back down to 1.00% - that would be a gain of about 20%.

However if it gets Ugly I can see the yields going a lot lower than 1.00% - maybe down to .50% where the gain would be about 35%. Currently German 30 years are at Negative -.122%. Japan is at .661% ( bottomed at about .3% last March)

The US dollar has been in down trend but is probably about to reverse given stability in Washington and a realization that although deficits are large in the US the US taxes its populace less than almost anyone else. A Consumption tax similar to one like Canada's of 13% could wipe out annual deficits and conceivably the US Federal debt could actually be paid back. That is a pipe dream for most other nations as they are already at about Maximum tax - any increases will not result in materially more revenue.

In any event having at least a small portion in long term US treasuries can help a portfolio in bad times. I don't think we have seen the bottom in rates yet. We are in a very deflationary Economy. If Interest rates go much higher it will tank the economy as total US market debt is about 400% of GDP. Rates go higher by 1% and that costs the economy 4% wiping out any growth.

The only scenario where I see rates going materially higher for a prolonged period of time is if all worldwide debt is wiped out - private/corporate and Government so entities can borrow again for consumption and really drive up prices outweighing supply. There are some short term issues with Supply right now but those should go away shortly and then we will be in an oversupply situation again like we have been for for a few decades as we have not been capital limited.

[verticaldoug]

Originally Posted by morrisond

30 Year US Treasuries.

If you had bought them last year at this time at a Yield of 2.36% and sold them when rates bottomed on March 9, 2020 at .702% you would have had a gain of about 42.7%.

Right now 30 Year US Treasuries are at about 1.86%. In a stock market selloff and or the economy stagnates you could easily see the yield back down to 1.00% - that would be a gain of about 20%.

However if it gets Ugly I can see the yields going a lot lower than 1.00% - maybe down to .50% where the gain would be about 35%. Currently German 30 years are at Negative -.122%. Japan is at .661% ( bottomed at about .3% last March)

The US dollar has been in down trend but is probably about to reverse given stability in Washington and a realization that although deficits are large in the US the US taxes its populace less than almost anyone else. A Consumption tax similar to one like Canada's of 13% could wipe out annual deficits and conceivably the US Federal debt could actually be paid back. That is a pipe dream for most other nations as they are already at about Maximum tax - any increases will not result in materially more revenue.

In any event having at least a small portion in long term US treasuries can help a portfolio in bad times. I don't think we have seen the bottom in rates yet. We are in a very deflationary Economy. If Interest rates go much higher it will tank the economy as total US market debt is about 400% of GDP. Rates go higher by 1% and that costs the economy 4% wiping out any growth.

The only scenario where I see rates going materially higher for a prolonged period of time is if all worldwide debt is wiped out - private/corporate and Government so entities can borrow again for consumption and really drive up prices outweighing supply. There are some short term issues with Supply right now but those should go away shortly and then we will be in an oversupply situation again like we have been for for a few decades as we have not been capital limited.

The US does not have a deflation issue, the US had some disinflation earlier in the year on the shutdown (mostly energy related) but that only lowered price growth to +0.1% YOY. It is back to +1.2%. The issue for markets is whether the 1.2% stays here and goes slightly lower or tends to ratchet back up to 2%.

Countries like Japan, Switzerland, Greece have true deflation (negative price growth) and their economies and markets behave really differently.

Historically, the central banks only controlled the short term rates, and you could count on long term rates for inflation expectations. Important signaling in my opinion. With Central Banks trying to manage the entire yield curve, long term rates really aren't useful for signaling inflation expectations.

Right now, slightly rising rates, reflation is viewed positively for growth, so banks respond since so much of their revenue is NII. However, we are in a bit of a central bank trap which if rates rise too much, we get a 2018 style sell-off... I don't know how rates go to back to 'old normal' levels without breaking egg shells.

[morrisond]

Originally Posted by verticaldoug

The US does not have a deflation issue, the US had some disinflation earlier in the year on the shutdown (mostly energy related) but that only lowered price growth to +0.1% YOY. It is back to +1.2%. The issue for markets is whether the 1.2% stays here and goes slightly lower or tends to ratchet back up to 2%.

Countries like Japan, Switzerland, Greece have true deflation (negative price growth) and their economies and markets behave really differently.

Historically, the central banks only controlled the short term rates, and you could count on long term rates for inflation expectations. Important signaling in my opinion. With Central Banks trying to manage the entire yield curve, long term rates really aren't useful for signaling inflation expectations.

Right now, slightly rising rates, reflation is viewed positively for growth, so banks respond since so much of their revenue is NII. However, we are in a bit of a central bank trap which if rates rise too much, we get a 2018 style sell-off... I don't know how rates go to back to 'old normal' levels without breaking egg shells.

Yes disinflation is a better nuance for this nanosecond. I more see deflation when supply returns to normal.

[mg2ride]

Originally Posted by morrisond

30 Year US Treasuries.

If you had bought them last year at this time at a Yield of 2.36% and sold them when rates bottomed on March 9, 2020 at .702% you would have had a gain of about 42.7%.

Right now 30 Year US Treasuries are at about 1.86%. In a stock market selloff and or the economy stagnates you could easily see the yield back down to 1.00% - that would be a gain of about 20%.

However if it gets Ugly I can see the yields going a lot lower than 1.00% - maybe down to .50% where the gain would be about 35%. Currently German 30 years are at Negative -.122%. Japan is at .661% ( bottomed at about .3% last March)

The US dollar has been in down trend but is probably about to reverse given stability in Washington and a realization that although deficits are large in the US the US taxes its populace less than almost anyone else. A Consumption tax similar to one like Canada's of 13% could wipe out annual deficits and conceivably the US Federal debt could actually be paid back. That is a pipe dream for most other nations as they are already at about Maximum tax - any increases will not result in materially more revenue.

In any event having at least a small portion in long term US treasuries can help a portfolio in bad times. I don't think we have seen the bottom in rates yet. We are in a very deflationary Economy. If Interest rates go much higher it will tank the economy as total US market debt is about 400% of GDP. Rates go higher by 1% and that costs the economy 4% wiping out any growth.

The only scenario where I see rates going materially higher for a prolonged period of time is if all worldwide debt is wiped out - private/corporate and Government so entities can borrow again for consumption and really drive up prices outweighing supply. There are some short term issues with Supply right now but those should go away shortly and then we will be in an oversupply situation again like we have been for for a few decades as we have not been capital limited.

I have exactly ZERO idea as to how the U.S. treasury market works. I'll have to do some research.

[morrisond]

Originally Posted by mg2ride

I have exactly ZERO idea as to how the U.S. treasury market works. I'll have to do some research.

They are very liquid and you should be able to buy them on almost any platform. You can buy them and sell 2 nanoseconds later.

The interesting thing is that the supply of long term ones is very limited - if I recall something less than $2T with many of them held by Pension funds and insurance companies who will hold them to maturity and hence why when they are sought after in times of stress the price can go up incredibly quickly.

The amount that are liquid and able to be bought are probably somewhat less than Tesla's current market cap. I'm joking but I bet not that far off.

[veloduffer]

Originally Posted by morrisond

They are very liquid and you should be able to buy them on almost any platform. You can buy them and sell 2 nanoseconds later.

The interesting thing is that the supply of long term ones is very limited - if I recall something less than $2T with many of them held by Pension funds and insurance companies who will hold them to maturity and hence why when they are sought after in times of stress the price can go up incredibly quickly.

The amount that are liquid and able to be bought are probably somewhat less than Tesla's current market cap. I'm joking but I bet not that far off.

Also look at TIPS that returned over 10%. On a risk adjusted basis, that's excellent.

US treasuries are essentially the same as cash, as they are often pledged for collateral purposes and are treated as risk-free in terms of default. As such, this has a multiplier effect.

Other govt paper such as Fannie/Freddie and other agencies are often treated similarly to treasuries since they have the full faith of the US govt.

The more looming question is if the fiscal deficit gets so large that US govt securities are no longer considered "risk-free". Support for the US dollar as a reserve currency around the world is helped in that is used to price many commodities like oil, minerals, etc. There has been some push by the Chinese and Russians to use alternative currencies, like the renminbi. Also, bitcoin or some digital variant could also be a threat to the US dollar.

Interestingly, in the Financial Crisis, the US Treasury was the flight to safety even though the US financial system was the center of the storm.