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  #316  
Old 11-21-2018, 07:18 AM
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Can't comment on the Elephant in the room. Lets just hope it gets some oversight soon.
Oh man, so tempted but ya know, I won't say it....
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  #317  
Old 11-21-2018, 07:19 AM
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Bought four more shares of VOO for my 2018 Roth IRA. They're on sale for the moment. Can't really time the markets, but we can buy on dips. It brings incremental gains, to use Team Sky's phraseology.

Yeah, it hurts to see these losses over the past months but the reasons are far greater than the elephant in the room, about whom we may not comment. I think the markets have been due for a correction for several years now with gains that didn't seem sustainable or reality based. I'm no expert on finance at all but it seems like double digit market growth can't keep going and it's unrealistic to expect it. So these corrections happen.

My strategy is the same as it has been: Just keep on keeping on. No drastic moves, ever.
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  #318  
Old 11-21-2018, 08:10 AM
SPOKE SPOKE is offline
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Are the traditional safe havens such as bonds, gold or real estate benefiting from the down turn??
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  #319  
Old 11-21-2018, 08:17 AM
Mikej Mikej is offline
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Originally Posted by SPOKE View Post
Are the traditional safe havens such as bonds, gold or real estate benefiting from the down turn??
Pretty sure bonds are on the not list since interest rates are rising. Same with real estate, houses are sitting longer. But I reserve the right to have no idea what I'm talking about.
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  #320  
Old 11-21-2018, 08:18 AM
echappist echappist is offline
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Bond is taking a beating (due to rising interest).

No idea about precious metal

Real estate has cooled, due to interest rate

Fun fact, most of gains in bond funds (e.g. Barclay Aggregate) is primarily due to lowering interest from highs of 15%

Last edited by echappist; 11-21-2018 at 08:20 AM.
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  #321  
Old 11-21-2018, 08:20 AM
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Bond is taking a beating (due to rising interest).

No idea about precious metal

Real estate has cooled, due to interest rate
Quality medical REITs are doing well.
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  #322  
Old 11-21-2018, 08:21 AM
Mikej Mikej is offline
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Looking like the tech sell off may be the best bet - Amazon and Netflix -
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  #323  
Old 11-21-2018, 10:08 AM
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MattTuck MattTuck is offline
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On the thesis of US government bonds being a safe haven, rising interest rates are really just one headwind to that thinking. The other is huge deficits financed by trading counter parties that export to us. Thanks to the recent ratcheting up of trade negotiations, we are likely to see falling demand for US treasury debt compounded by rising interest rates, which means the debt the treasury needs to sell will demand a higher interest rate, which drives up the cost of rolling over existing debt, which compromises the federal budget and leads to a larger deficit, and thus more need to borrow money.

A damaging downward spiral is not out of the realm of possibility.

Still, if you think the economy is strong and robust, one has to answer the following question: Why is the market so scared of a 3.5% fed funds rate?
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  #324  
Old 11-21-2018, 12:53 PM
echappist echappist is offline
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Originally Posted by MattTuck View Post
On the thesis of US government bonds being a safe haven, rising interest rates are really just one headwind to that thinking. The other is huge deficits financed by trading counter parties that export to us. Thanks to the recent ratcheting up of trade negotiations, we are likely to see falling demand for US treasury debt compounded by rising interest rates, which means the debt the treasury needs to sell will demand a higher interest rate, which drives up the cost of rolling over existing debt, which compromises the federal budget and leads to a larger deficit, and thus more need to borrow money.

A damaging downward spiral is not out of the realm of possibility.

Still, if you think the economy is strong and robust, one has to answer the following question: Why is the market so scared of a 3.5% fed funds rate?
b/c the projected returns for equities isn't very high, and 3.5% fed funds rate is getting awfully close to the risk premium margin?

it that were really the case, then perhaps all that quantitative easing ended up only kicking the can down the road...
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  #325  
Old 11-21-2018, 02:15 PM
Mzilliox Mzilliox is offline
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capitalism is fracturing, it is no longer as suitable for humanity as it once was. we are measuring the wrong things to gauge success and failure. whos actually benefiting from "the market"?
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  #326  
Old 11-21-2018, 02:19 PM
Clean39T Clean39T is offline
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Last edited by Clean39T; 06-07-2020 at 11:28 PM.
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  #327  
Old 11-26-2018, 10:26 AM
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MattTuck MattTuck is offline
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On the topic of buybacks, with a little GE thrown in, thought this might be of interest to some of you.

Quote:
GE was one of Wall Street’s major share buyback operators between 2015 and 2017; it repurchased $40 billion of shares at prices between $20 and $32. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.

Even more important, GE has now left itself with minus $48 billion in tangible net worth at Sept. 30, with actual genuine tangible debt of close to $100 billion. As the new CEO Larry Culp told CNBC last Monday: “We have no higher priority right now than bringing those leverage levels down.” The following day, GE announced the sale of 15% of its oil services arm Baker Hughes, for a round $4 billion.

Of course, since that sale values Baker Hughes at $26 billion, and GE paid $32 billion for 62% of Baker Hughes as recently as last year, which looks to me like a valuation for the whole company of $52 billion, GE shareholders appears to have lost half the value of their investment in Baker Hughes in about 18 months.
That, in a nut shell, is why I detest stock buy backs. The share holders that sold their shares to the buy back program made out ok, thanks to the artificially boosted demand for shares. All the share holders that held their shares are now saddled with unrealized losses on their shares and the extra debt to boot.

link to story on marketwatch
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  #328  
Old 11-26-2018, 10:33 AM
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Originally Posted by Mzilliox View Post
capitalism is fracturing, it is no longer as suitable for humanity as it once was. we are measuring the wrong things to gauge success and failure. whos actually benefiting from "the market"?
I am.

If you target 6% annual return through solid, high dividend stocks you can achieve this. This has been my strategy for the last 9 years. In those nine years I have beat the street every year. One year, I made a 30% return. This will be the first year I did not meet my 6% growth goal simply because I did not act fast enough regarding rising interest rates or the stock that were affected by the rise in interest rates have not had enough time to come back.
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  #329  
Old 11-26-2018, 10:43 AM
XXtwindad XXtwindad is offline
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Quote:
Originally Posted by MattTuck View Post
On the thesis of US government bonds being a safe haven, rising interest rates are really just one headwind to that thinking. The other is huge deficits financed by trading counter parties that export to us. Thanks to the recent ratcheting up of trade negotiations, we are likely to see falling demand for US treasury debt compounded by rising interest rates, which means the debt the treasury needs to sell will demand a higher interest rate, which drives up the cost of rolling over existing debt, which compromises the federal budget and leads to a larger deficit, and thus more need to borrow money.

A damaging downward spiral is not out of the realm of possibility.

Still, if you think the economy is strong and robust, one has to answer the following question: Why is the market so scared of a 3.5% fed funds rate?
I have no idea what you just said, except that it sounds ominous. I'll trade you some spare 29er parts for an economics lesson...
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  #330  
Old 11-26-2018, 10:53 AM
Mzilliox Mzilliox is offline
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Originally Posted by joosttx View Post
I am.

If you target 6% annual return through solid, high dividend stocks you can achieve this. This has been my strategy for the last 9 years. In those nine years I have beat the street every year. One year, I made a 30% return. This will be the first year I did not meet my 6% growth goal simply because I did not act fast enough regarding rising interest rates or the stock that were affected by the rise in interest rates have not had enough time to come back.
I also invest, last year got 9 percent, this year no way, not even close. i do it because i can, but not many do, less than half of Americans according to most studies and stuff. the system we revere so much doesn't serve many, doesn't measure very good metrics, and doesn't actually say much about the general state of the economy unless you are one of a few experts who understand the language of the market and can extrapolate the data. and those people are more lucky than good anyway, because humanity is not predictable.

but im glad you are finding almost 6 percent...
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