Was thinking that if we get a spike in inflation that isn't transitory, a capital gains tax increase and then an increase in interest rates is this going to be the storm that causes the next big drop? This assumes a lot of things happening but if these all converge I can't see it being good for the overall market. I trimmed a little and took some gains over the last month but very reluctant to put new money to work other than through options.
Don’t forget the possibility of a global conflict. Markets hate the uncertainty of military action. The South China Sea is a hot spot. The Chinese are growing more aggressive with each year. I dont think military intervention is imminent between the US and China as we have too much commerce between the two countries but the area is a growing concern nonetheless.
The other obvious area is the Middle East. Too complicated and I’m too ignorant of all the issues to opine on the situation.
Any tax increase dampens inflation. Gov't prints money increases inflation, increases taxes, takes that money back. We're getting a spike in economic growth, which is causing the fear of inflation. But that spike is only going to last a few quarters. And then we probably go back to the normal 2% economy.
Fed policy is the known risk. If they become too hawkish, but I doubt they do anything too crazy and any sell offs because of the fed would be buying opportunities. Because they will quickly turn dovish.
There are the unknowns, like global conflict, solar flare, or virus variant that the vaccine doesn't cover.
But, I think we might be 1 year into the next 10 year bull market. I would like to a several month or a year of consolidation.
Thanos was the hero
Interesting thought. Would love to hear your thoughts on that and I don’t say that in a negative or questioning manner. I’ve been debating selling some holdings and sitting on a higher cash balance in my “fun” account then normal. I really appreciate the insight from the regulars on here and what is shared.Originally Posted by boneil
Market corrections have always been tough for me.
Market corrections can be broad based, difficult to predict, and difficult to take advantage of...again at least for me.
I am horrible about “timing” the market so therefore always remain mostly fully invested leaving little funds to be able to take advantage of broad based corrections. However, when I was working and had an allotment available to invest I would always be more aggressive at these times. Was tough to do psychologically, but looking back it was always the right thing to do.
This also means, of course, I don’t typically reduce exposure to the market in the expectation of an impending correction. This is mainly because I am so horribly wrong at predicting these occurrences. The times I have tried and been right on the downside, I waited way too long on getting back in, misreading how fast the snap back was...so I quit trying to move in and out. This activity also creates a tax consequence which I view as additional drag on returns.
I am sure many would call my approach to investing boring as he&#. It’s just a multi decade collection of trial and error to find out what works best for me.
Combination of $1.7 Trillion in student loan debt, inflation, tax increases, and energy costs.
TINA, there is no alternative. Where else would you put your money? Cash loses value and missed opportunity costs. We all know the economy is growing, and we still have a ways to go to reach full employment. So we'll get a spike in growth this year, and then we probably go back to the 2% growth for the foreseeable future. The Fed isn't going to do anything crazy, and maybe they raise rates a little at a time during a strong economy, nothing to be worried about there.
Taxes being raised, takes money out of the system, putting a damper on run away inflation= bullish
student loan debt will start getting paid back, pulling money out of the system dampens inflation= bullish
student loan debt gets forgiven= simulative=bullish
And anything that may cause a recession, the Fed and gov't know what to do now. Pump trillions into the economy to keep consumer demand going. Then raise taxes to pay it back. Recessions will be short lived.
The thing to worry about is the thing we're not thinking about. The unknown, but how much money is lost waiting on the unknown, the black swan.
I think we are soon to be entering a new economic revolution. We had the agricultural revolution, the industrial revolution, the internet revolution, get ready for the AI, deep learning revolution.
Thanos was the hero
Couldnt agree more. I do think it is interesting how so many go about their lives taking everything for granted/not noticing what is happening around us. when asked about investment ideas, my most common response is pay attention! ideas are all around you. My intent is not to be snide or coy but to lay out the important thesis of thinking about what is happening as a far more useful and sustainable approach than relying on "stock tips".
Most are aware of the industrial revolution 1760-1840...a period of transformation moving from the economy from mostly agrarian to large scale manufacturing but many look so surprised when I tell them to just look at what's in their hand and say that the computing power in that phone used to take buildings full of transistors, chips, etc.
We all are LIVING the digital transformation and that transformation continues to evolve w AI, deep learning. How this affects financial mechanisms (fintech), how cures are found (biotech), even transportation (EV's) is fascinating to me. Live in the moment to me means watch and absorb everything that is happening. Be intellectually curious. So many channels of information are available to learn about what continues to unfold. We are living in an exciting transformative time.
Last edited by BoilermakerZ519; 04-25-2021 at 04:50 PM.
I believe in consistency. Doesn't matter the news, I keep/continue investing money into the system. I do keep some extra handy for special occasions to be available when I think I'm buying any dip or opportunities....
Good luck!
It's not what you can take with you,
It's what you leave behind.
After watching CNBC World tonight, it could be a COVID mutation that bypasses the vaccines. It sounds like India is having a huge outbreak right now. Of all the risks I certainly hope this one isn't one that materializes. I'm ready for COVID to be gone.
The tax increase would just cause it if people scramble to take gains before they go into effect. We saw something similar last year when high net worth individuals accelerated their estate tax planning by giving gifts to their kids in anticipation of lowering the estate tax exemption. If we get towards the end of the year and the capital gain rate is expected to be much higher I could see people taking gains and then maybe buying back later to have a higher basis. I doubt the increase will be as high as advertised but if it is still up in the air by year end we could see some major selling.
also, raising capital gains might also encourage less trading, increasing holding periods = helps reduce volatility, bullish
in the short term, yes there could be some selling to lock in gains at a lower rate. But long term stocks still provide the best return of all the wealth generation mechanisms.
Last edited by BoilermakerZ519; 04-26-2021 at 09:35 AM.
There could be some great opportunities to buy some stocks that ran up if we get some tax selling. I still have my list ready. Would love to see a 15-20 percent pullback.
The way my Bassmasterfantasy picks have performed, I would say the next correction will occur when my team is higher than 1,000 points.
This will be talked about in the same manner as “when hell freezes over”.
margin calls
Ohhhhh I think it will be a good while before a serious market crash happens. Roughly 10 trillion is being put loose into the economy. I think when that starts to dry up we might see some sort of crash, but I am skeptical on that one. I think we come out of the covid and then after awhile the rest of the world comes out of it and the market rolls for years. As a side note, I just ride out the crashes. Can't time it to save my life.
Reply With Quote