Jamie Simon sure did an about face. He went from afternoon showers to full blown Cat 5 hurricane. I'm guessing he may not be a fan of QT or maybe he just has very good insight on what this will do to the lending part of their business. I definitely listen when he talks but I am also aware he runs a bank and wants policies that favor banks.
Everything that I have read, is that nobody knows what this level of QT will result in. Was it Jamie or somebody else I heard today say that we will be studying this time period for the next 50 years. The great experiment it's being called.
I look at it like this, the last time we started QT the markets dropped 20% before the Fed reverse course. But back then, there wasn't inflation, if my memory is correct. So this time around we have high inflation, the amount of QT is double what it was before, and the balance sheet is significantly more.
I think we have alot more pain ahead, I hope there is, I want to buy stocks at much lower prices. I even put on a hedge trade today. I bought SARK, the short ARKK ETF. I figure that should be a good hedge against my TSLA longs, and there is just so much garbage in that ETF. My plan is to hold that into the fall when QT is at it's max. But that's subject to change depending on what the inflation data is and what the FED does. They might ease up if things get to bad.
Thanos was the hero
I hope the 10 year gets to 4-5%. That will fix inflation in a heartbeat and I will load up on 10 year bonds at that level. If they want to normalize housing the 6-7% rates are what were normal in the 1990s and 2000's before Greenspan started his policy which lead to the housing bust.Originally Posted by boneil
As noted, months ago, keep your powder dry. We're in for a whopper of a ride.
Personally, we have zero sympathy for any business trampled by it. Sow & reap.
And, please, please, pretty please, don't bail the leveraged idiots out, again.
I’m going in for a meeting with Schwab tomorrow. My plan is to move our investments from Stifel to them. My plan is to move just about everything into CD’s and fixed income of some sort. I am a saver, investor, but not a trader. Right now I’m holding XLK, XLY, PFE, XOM,KO, MO, T, SO, and cash. I do have some preferred’s too. What do you think?
Based on our portfolios ... find a different forum.
We're both retired and staged accordingly. Mostly RE, followed by income, diversified international growth, cash and commodities.
And ... 2022 has purchased a Lexus sedan & set it on fire in the parking lot of the dealership, after signing/delivery, no insurance.
All that aside, our friends are jealous. They're almost done lighting the 3rd Lexus LX 4X4, heading to the RV lot to burn a Class B.
Sorry, you lost me. I’ll have to have Stu PHD explain the last part. I’m a simple man with a 2021 Honda CRV that was purchased the BBC method.Based on our portfolios ... find a different forum.
We're both retired and staged accordingly. Mostly RE, followed by income, diversified international growth, cash and commodities.
And ... 2022 has purchased a Lexus sedan & set it on fire in the parking lot of the dealership, after signing/delivery, no insurance.
All that aside, our friends are jealous. They're almost done lighting the 3rd Lexus LX 4X4, heading to the RV lot to burn a Class B.
Translation ... we now measure our investment success in auto values.
One Lexus sedan MSRP in losses this year, overall good considering.
There's NO safe place, period. Not even your floor safe is a good spot.
If rates go up preferreds are going to get killed and high yield stocks like T and MO won't fare well either if you can get a risk free return in a bond yielding an equivalent amount. Real estate is not safe either. It is illiquid and when rates go up and businesses vacate commercial space and tenants stop paying rent, it will be a mess. Probably best not to own stocks unless you have a 10 year time horizon. Nothing is really safe if we get stagflation. You can sit in cash or CDs and just die a slower death. There will be some great buying opportunities in the next year or so. The best stocks are going to be the dividend aristocrat type stocks that pay 2-4% in yields, have a strong balance sheet and grow their dividends in excess of inflation. With the volatility people using options will be able to keep up somewhat using cash or stocks to generate premiums. Throw out the playbook and plan for a sideways or down market the next few years.
The worst Preferred I have now is Public Storage. It is too low to sell out of.
As long as I have preferred that are accumulative I should be ok, right? It is the ones I have that are non-accumulative that concern me. I am not using these for income.
Last edited by Bassin08; 06-01-2022 at 10:33 PM.
The big issue I have with preferreds, and I do own a few, is they are issued by banks, utilities and real estate investment trusts. REITS and utilities get hurt with higher rates as they tend to borrow alot and have to roll over their debt. Banks do better with higher rates but if we get higher rates and credit deteriorates then they get hit hard from defaults. And if they are perpetual there is no maturity date which means they have a very high duration risk. I own a very small amount of these for income but they can suspend their dividends if they'd up cutting the dividend on the common shares and if they are not cumulative they don't have to pay back any of the ones the missed. There is really no safe place to go n high yield right now if rates are set to go up.
IMO, the best investment now ... vacations.
Seriously, bonds, stocks, RE, commodities ... all very risky.
Take a trip, blow some coin, relax awhile.
In the long term, you'll be fine, just be diversified.
Amen to that
Before I left this morning MSFT came out and pre announced a warning about the strong dollar. I figured the market would be down big today. Get back and the market is up. It makes me think about covid. Word of covid in China started circulating in January I think. Things were getting bad, and yet the market went on to make new highs in February.
We've had some pretty strong warnings recently, and yet we're still bouncing. I don't trust this bounce.
Thanos was the hero
The machines are in charge in the short term.
Musk is now warning. Reuters is reporting that a leaked email says Musk has a "super bad feeling", Tesla has paused all hiring and is even looking to cut workforce. Thats terrible for a company that is ramping production of 2 new factories plus just started building the mega pack factory. I think I'm gonna get a chance to load up in 5s
Thanos was the hero
Grocery ad yesterday ... more specials than they've had in a long time.
Including a $50 gas card for $40, when purchasing $50+ in groceries.
Spend $100+ and you can do it 2X. Spend $200+ and swing away 4X.
Wife says the retail clothing is starting to be aggressive, furniture too.
Pair it up with the indexes, credit reports, etc. and it's here, not coming.
Keep the powder dry, the buffalo are getting closer. Be patient & ready.
Crazy how this morning it was "cutting workforce by 10%", but now the email is out, it also includes him saying Cutting salary workers by 10% but hourly workers, those who make the cars, solar panels, and batteries, are going to increase the workforce. Just another day as a TSLA bull
Thanos was the hero
He wants the office workers back in the office so this may have been a shot across their bow.
You hit this nail head on brother, since I was in the business for over 20yrs and I am in the process of selling the last 45 lots section of my subdivision. Everyone is up in arms about the current rates being just under 5%, but no one wants to admit that the rates we have had in the last 10 yrs +- were somewhat out of the norm.
Late 1970's rates were in the 13-15%, 1980's 10-12.5%, 1990's 6-8% staying there til the subprime crap that brought the housing crash, and after that the recovery brought in the sub 3% rates, which now everyone wants back, though it was only that way for a short time compared to all others. I see the building supplies price spike during the pandemic boosting home prices to the unrealistic levels we have now, but with Canada opened, lumber prices are crashing and concrete is dropping fast.
it may be a bit of a rough ride, but I think we will come out for the better.
Dig, you might be correct about lumber (I didn't check) however concrete is doing nothing but going sky high out west. Cost per cyd is now approaching $200 and quarterly increases of $10/cyd. Suppliers are taking liberties with the fuel cost increases being the driving force.
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