I know timing the markets is a fools errand but....

Discussion in 'General Discussion' started by Utumno, Sep 24, 2019.

  1. Utumno

    Utumno Administrator Staff Member

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    it really feels like every indicator anticipates a big meltdown correction sometime soon. Aside from Trump's ongoing trade wars and the Fed having to play weird tricks just to keep things afloat lately (and all sorts of other global indicators showing warning signs), we've also had a gloriously long bull run in the stock markets for about a hundred years in a row now, and that shit has to come down at some point.

    Is anyone even considering moving their shit somewhere safer? I have almost all my retirement savings in a pretty generic ETF mix (55% total domestic stock market, 25% international market, 20% aggregate bonds). I think the classic advice is to use something like this until you're close to retirement age and maybe start upping the bonds portion towards retirement, and otherwise don't touch anything.

    I can't help the feeling though that I should move at least some (or most) of this into some defensive fund or semi-stable place for like the next year. I mean yes, maybe the miraculous happens and 2019-2020 ends up being an amazing 25% bull run but that sure as shit seems incredibly unlikely, and even if I missed out on that, it's not a big deal to me.

    I think the only thing that has kept me from moving anything is general laziness and not even really knowing where I'd move money too. There are more defensive-minded ETFs (stuff that focuses on dividend stocks and stuff that people need to live like food and other staples). And there's always gold or cash. Not sure what other things ppl usually do if they think a correction/recession is imminent.
     
  2. Utumno

    Utumno Administrator Staff Member

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    j/k fuck all that i just moved everything into LINK

    picking my lambo colors now
     
  3. Agrul

    Agrul TZT Neckbeard Lord

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    not selling any of my investments, but am saving up cash/delaying new investments for 6-12 months to see if there's a crash
     
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  4. Velox

    Velox TZT Abuser

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    US markets are basically +/-+0 over the last year, so the bull run is pretty much over already. As the dollar has appreciated against most currencies it has still not been a bad investment though. People tend to forget that stock valuations are denominated in a particular currency.

    I have given up timing the market, but I keep enough to cover unforeseen events for the immediate future in a bank account. I'm not comfortable with the current market either, but its dominated by political risk, which is difficult to predict.

    I'll also point out that the world is in zero, or even negative, interest-rate territory, which is pretty much uncharted waters. We have possible asset bubbles everywhere. For example, in most places, housing is less affordable than ever. If there is a lot of unaccounted for such "inflation", the stock markets might well continue to appreciate just to reflect the depreciating value of money. Inflation is a complex subject which economists have attempted to formalize and measure. Without being an expert on the FED inflation metric, I wouldn't be surprised if it wasn't perfect. Few models are. While merely a possible explanation, if this was the case, then yes, the stock market could keep going up in USD terms, while cash depreciates. Normally you could observe this in currency exchange rates, but the financial crisis got the whole world addicted to cheap credit.
     
    Last edited: Sep 24, 2019
  5. Utumno

    Utumno Administrator Staff Member

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    The negative interest rate thing is particularly freaky. I don't understand economics well enough to have a sound opinion on it, but it sure as shit *feels* like there is bubbly shit everywhere w/banks pulling out every weird trick in the book to keep everything from keeling over.
     
  6. Red

    Red TZT Neckbeard

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    Precious metals
     
  7. Velox

    Velox TZT Abuser

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    Yeah. My point is just that cash isn't necessarily "safe" either. Nothing is safe. The last time I invested in gold it ended up being positively correlated w/ the stock market. AFAIK bitcoin also is a bit, it is just super random (and completely nonsensical). Bitcoin could very well go to zero in the next financial crisis, being a prime suspect of said asset bubbles.

    There is no easy way to hedge global trade wars, more generally a global financial meltdown, or a global cold war. Perhaps anti-depressants, cheap vodka, and guns?
     
    Last edited: Sep 24, 2019
  8. Agrul

    Agrul TZT Neckbeard Lord

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    "I'll also point out that the world is in zero, or even negative, interest-rate territory, which is pretty much uncharted waters."

    Do you mean negative real territory? Real-world examples of actually negative interest rates are quite rare (but I think you could e.g. interpret the Fed paying banks for their reserves as a kind of 'negative interest')

    In real interest rates, is that actually all that strange situation, though? I find it hard to believe it hasn't got much in the way of notable historical precedent
     
  9. Velox

    Velox TZT Abuser

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    I meant loosely "very low", but several European nations have negative interest rates. E.g. Sweden has negative "FED" rate (-0.25% [1]) and negative bond yield: https://tradingeconomics.com/sweden/government-bond-yield

    After struggling with very low "official" inflation for years, Swedish inflation is now at 2.2%. I believe the central bank has stated that there is no limit to how low they can make the interest rate.

    I believe e.g. Denmark recently had some examples even of negative (norminal) consumer housing loans, but the banks are believed to still have made some money off fees.

    I've also seen economists arguing that expectations for what a "normal" interest rate is (forgot the technical term) have also gone down.

    EDIT: I'm not knowledgeable enough to figure out what all this entails, but near-zero interest rates doesn't seem sustainable.

    [1] https://www.riksbank.se/en-gb/stati...nge-rates/repo-rate-deposit-and-lending-rate/
     
    Last edited: Sep 24, 2019
  10. Red

    Red TZT Neckbeard

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    Beets
     
  11. Utumno

    Utumno Administrator Staff Member

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    Yeah, not necessarily cash, but maybe one of the many "defensive" ETFs (like all the various Consumer Staples funds from Vanguard, Fidelity, etc.)
     
  12. Samassi Abou

    Samassi Abou TZT Abuser

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    Cash. Elaborate arguments about inflation rising sound unlikely.

    I used to assume without really thinking about it that cryptos might be a hedge, but in reality a lot of those dudes are low wage cucks who could be in big trouble if a recession hits. You can’t HODL dogecoin if you don’t have income to pay your rent.

    Even the gold price crashed during the GFC before Obama started talking QE and stimulus and inflation hysteria set in amongst Tea Partiers and libertarians.

    I still don’t think there will be a harsh recession though, unless war against Iran blocks oil supply in the Middle East which is entirely possible.
     
  13. Czer

    Czer I'm a poor person. The lambo is my cousin's.

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    Iran would simply stop all oil in the middle east and destroy every desalination plant in the gulf

    that easy
     
  14. Samassi Abou

    Samassi Abou TZT Abuser

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    Picking a fight with Iran was incredibly foolish because they can probably shut down the Middle East’s oil industry and send the world into recession. Or at the very least, drive up oil prices to a level that makes Trump unpopular.

    I assume that they’re going to try to do that in the months before the US election to make sure that Trump doesn’t get re-elected.
     
  15. Sear

    Sear TZT Neckbeard Lord

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    I expect this too, Utumno.

    I'm already ~80% real estate, but I will likely move out of my market-tracking ETFs (e.g., SPY) before the end of the year.

    Haven't decided on my tech stocks. MSFT for example I feel I should probably dip out of soon, but that was intended to be a long-term investment.
     
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  16. Velox

    Velox TZT Abuser

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    Without getting into technical arguments about the definition of inflation, I'm just pointing out that everything is relative. Stock market gains are priced in a currency. Essential goods like housing, non-imported food and other commodities have also generally gotten more expensive in said currency. Most would agree with this. If this trend continues, keeping your money in cash has a very good chance of continuing this depreciation of your wealth against these goods. If you want to e.g. save for a house, this is bad.

    Here it gets speculative, this is just a possible interpretation interpretation of this mechanism. This trend may continue, and the stock market has a good chance of maintaining parity or better. The reasoning is simple: I'm not certain central banks will allow the stock market to go down, and they might have been propping it up more than we realized with artificially low interest rates. This should cause inflation, and eventually it might, but due to globalization and the import of cheap crap from Asia, this may be masked. Measuring inflation is tricky - first selecting a representative basket of goods, then fairly accounting for changes in their quality/brands over time. Assuming this is correct, interest rates can probably still go lower (even negative), so this trend can continue for a while. At least as long as people on average have enough disposable income left over after housing + essential goods to buy imported crap.
     
  17. AgelessDrifter

    AgelessDrifter TZT Neckbeard Lord

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    FBEB74EE-3711-46D6-8D1F-9F0B9524E559.jpeg

    Charts are gonna chart but at the end of the day the rent is too damn high
     
  18. Samassi Abou

    Samassi Abou TZT Abuser

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    I agree with that in the long-term, Velox. I tend to be a believer in the secular (ie, long-term) stagnation thesis: that in the long term the world economy is slowing down. And since most Western governments refuse to use Keynesian stimulus (like infrastructure spending) to boost growth, their only option is usually interest rate cuts.

    The problem is that endless interest rate cuts lead to asset bubbles. Think of our parents’ generation with the 10%+ interest rates for their house loans. 10% of a million dollars is $100,000. 2-3% of a million is 20-30k. That’s a big difference is now much you pay back to the bank. So with a 2% interest rate the average person can spend much more on the face price of a house. Hence the rapid growth in property prices. God only knows what will happen if we get negative interest rates and banks actually pay people to take out a loan.

    So I’ll go back into property in the long term. Short term - in the next couple of years - there’s a question mark about the world economy, and in a recession, house and stock prices probably won’t go up, and in fact might go down a fair way. Buy the dip, as they say.
     
  19. Red

    Red TZT Neckbeard

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    Invest in AR-15's and bees
     
  20. Agrul

    Agrul TZT Neckbeard Lord

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    where can i buy some premium bees