Rolling US Economy Into The Shitbin Thread

The market still has a ton of room to pullback.

^ otmfm.

These days the equities markets and bond markets are only tethered to the real economy to the extent that monetary policy (the Fed) is tied to the real economy. The Fed's policies are tethered to accommodating banks' balance sheets as a proxy for the real economy. The banks no longer care about due diligence and throw money around carelessly on the understanding that if their risks blow up in their faces they will be rescued. The whole machinery is as shaky as a washing machine during the spin cycle with an unbalanced load.

Luckily we have a president who's an expert on unbalanced loads

I've been waiting all year for biotech to collapse. Today was a good day.

Can I invest in the Yerac fund?

My fund dividend plan is that I always buy the booze and food.

I'm in

yeah I think the news about rate increases is telling everyone the crack party is over

This might be worth a look: https://www.cfr.org/blog/trumps-stimulus-trumps-his-trade-policy

Is it bad the first thing I did was look at the author bio and roll my eyes?

damn, first the tech and now the graphy? no bio is safe.

at the least it didn't say "Proud Dad"

Trump's "Rates are unsustainably low and you're raising them too fast" reminds me of that old joke "Terrible food! And such small portions!"

At work the other week (consulting at a ratings agency) someone was talking about how the big three ratings agencies had done a lookback about their role in the puerto rico debt crisis and everyone felt fairly confident that they didn't mislead the public about the credit worthiness of the bonds and the blame rests with puerto rico and their mismanagement. Me and the latina woman in the room gave each other the look. I told her after I was going to buy an O RLY owl head to have on hand to put on in times like that.

I bring this up because I was just hate googling that guy in the blog post and watched 15 seconds of his talk on sanctions on Venezuela.

I got the impression that there's a fair amount of blame to put on UBS, which more or less controlled the entire bond market for puerto rico from front to back?

ok, sure, but from what I could see of that post (as the headline says) the rhetoric isn't matching the actions, and some of Trump's actions that do match it have effects that are yet to kick in. It didn't sound like he was a supporter. xp

I had to google a video because I thought he was british at first.

The way that blog post was written is like trump isn't doing all that shit in a spur of the moment silo and people are working backwards from the data produced.

Wheeeee!

On the one hand it’s too bad for my net worth but on t’other I’m getting a raise, the economy is a strange creature

not really sure what to do with my money rn

The market is still insanely high. I would assume most people here, if invested longterm bullishly, are still ahead. But also wheeeee.

Leaving it where it is for another few decades is usually a solid choice if you’re under 50

I’m an extremely passive investor though

yeah, I would think most people can just ignore whatever is going on.

I did use this time to set a stop loss order in a useless stock I owned just to make sure I knew how the mechanism worked

I set some high GTCs sells on bearish etfs in hopes of a flash crash.

I plan to just hold what I have for 30 years as well. But I've also held out 85% of savings last 0.5 year for going in at the next big discount. now how do I know it's arrived? Hoping yerac will let us know tbh.

I have no clue! I am only guessing. I never would've bet the market would've gone straight up after that terrible election.

yeah i have a decent chunk uninvested rn that I've been skittish on putting in because i was convinced we were headed to the shitbin but also i don't feel capable of understanding anything anymore after these past couple years

But I mean if there is a company you love for longterm, like for example SQ hit $100 recently now at ~$70, BABA hit over $200 recently now around $~140, I still think they are too high, ran up too fast especially from where they were at the beginning of 2016. But I am starting to think of buying a first small lot/tranche soon, but hoping to get further away from the price I sold both of them at. I can always average down if it dips far greater. I really don't know what's going to happen to the markets because of the Nov elections. And the market tends to be dead in Dec. except for people selling for tax purposes.

I would like to get in on the waitlist for The Yerac Fund as well btw

Have been buying BABA at various levels since they went public, probably a bit overinvested at this point, but the dips are very attractive to me. I'm a firm believer that whatever happens in the short term, this one has legs.

yeah it's too late Yerac, we're all relying on you to untangle the web now

I had BABA when it was around $68 and sold out of it way too soon, traded it here and there but have been waiting for it to tank again. I trade a lot but I have time to watch the market every day so my timelines on things are different. I also don't like to buy new positions on Fridays or hold a lot going into the new year because of 2016 where the first trading days of the year China's circuit breakers kept going off and the market just dove for almost the entire quarter. I also think I handle money stress better than a lot of people. I wasn't kidding where I said I felt like I am The Big Short but only the beginning part on repeat. This market after the election has been stupid.

Not I am the big short, but watching the big short. I feel christian bale's pain.

but what's the subprime mortgage crisis this time?

student debt?

There have been so many terrible IPOS. snapchat, blue apron, gopro, fitbit, switch. It would be nice if something like fb would just collapse, but that is purely dreaming.

all that VC-fueled tech unicorn BS. Occasionally a story pops up of Twitter shopping for buyers. I wonder if their Nazi-sympathizing CEO might be a poison pill.

I think the driver of the market downturn is pretty clear, although perhaps difficult to short. We've shoveled huge piles of money to the richest of the rich while middle and working-class earnings have stayed flat. Pile on a bunch of unnecessary tariffs, and you have a recipe for disaster. Prices are going up and no one is making enough money to keep up.

Everything just seems completely unsustainable at the moment.

calm down everyone. we'll cut taxes some more

what's the subprime mortgage crisis this time?

this is more of a stock market bubble, as a secondary effect of the Fed's enormous easing after the subprime bubble burst.

as I see it, the subprime bubble 'created' a sea of money in the form of financial paper. the real economy could not justify that sea of money, but the banks ignored that reality. when the Fed saved the banks from their greed and folly, they reconstituted that same sea of money and reinjected it into the economy over a number of years. over those years the real economy grew enough to absorb some of that reflated money, but the US stock market was far ahead of real growth even in 2016. after the 2016 election and the enormous tax cut the US stock bubble has really taken off. It was benefitting from the lack of 'safe havens' that gave investors an attractive return.

The Fed's raising of interest rates is altering that equation. Bonds now appear safe and growingly attractive, while the stock market looks like it is suspended in midair with no underpinning in the real economy. Investors are poised at a tipping point between greed and fear, and fear is starting to grab the steering wheel and drive the market on more days. Eventually it will drive the stock market into a precipitous decline, often called a crash. Let's hope the banking system is less deeply in thrall to this bubble than it was to the subprime catastrophe.

not moving anything already in, but my 401k contributions for the rest of the year are going into bonds

Such a good thing that Dodd-Frank was partially repealed in the past year.

I'm allocated 60% stocks, 20% bonds, 20% cash for 401k contributions right now. I figure as stocks drop I'm buying the dips, so no need to get completely out of stocks.

fair point. i'm dumb but i hate the stock market.

What is the 20% cash? Just in a money market? If you are nowhere near retirement, you're totally fine.

is the stock market much more than legalized, taxpayer-insured gambling for the rich? honestly