[Tyga11]

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

[2000cs]

Originally Posted by Tyga11

Ummmmmm didn't the S&P rise almost 60% over the past 2 years in a rising interest rate environment?

The whole thing is stupid anyways. If we get 'bad news' for a few months everyone will freak out and think we're heading for a recession if the unemployment goes >4.6%. I'd rather have the situation we are in now even if inflation goes up a little bit.

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

[kscarrol]

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

[Tyga11]

Originally Posted by kscarrol

Finance 101, opportunity costs. When rates were low/zero, the market was the only place to earn a real return. Now you get get close to 5% on a risk free US treasury. We also value companies, at least we used to, using discounted cash flows. The higher the discount rate is, the less valuable that stream of future cash flows is worth.

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

[Tyga11]

Originally Posted by 2000cs

I didn’t say the market would not rise in a rising interest rate environment. What I intended was that the realization that interest rates likely won’t be cut in the next little while resulted in a revaluation downward, especially of tech and emerging companies. After that, the trend up should resume.

I think we have to realize the 'selloff' (if we even want to call it that) is a result of technical trading. I don't see why big tech can't operate in a high interest rate environment like they have been.

Do you agree with my point? I would rather see a strong economy + lower unemployment + slightly higher inflation than the inverse.

[kscarrol]

Originally Posted by Tyga11

Are you saying the market is still too overvalued to justify equities? Is that your argument?

Because you could have received the 5% you are talking about the past 2 years.

Can you show me where I said that? Having been in the finance world for almost three decades I simply pointed out that investors always have other opportunities/options to put their money to work. When rates were zero and folks couldn’t get a return in a savings account, CD or bonds then equities were the place to be. Now folks have some options. Investing is always about risk versus reward. For older folks who are retired or near retirement, getting 5% with essentially zero risk is appealing.

I’m fully invested and always have been with no bond holdings.

[2000cs]

Originally Posted by Tyga11

I think we have to realize the 'selloff' (if we even want to call it that) is a result of technical trading. I don't see why big tech can't operate in a high interest rate environment like they have been.

Do you agree with my point? I would rather see a strong economy + lower unemployment + slightly higher inflation than the inverse.

They can operate, but their future returns (and they typically have none currently) are discounted at a higher rate, reflecting the higher interest rate expectations. Higher discount rate = lower valuation. Adjustment ensues.

Technical trading is just a part of it; my view is there tends to be an overshoot to bad or good news in the first day, often followed by a partial recovery. Used to be called a “dead cat bounce”

[Tyga11]

Originally Posted by 2000cs

They can operate, but their future returns (and they typically have none currently) are discounted at a higher rate, reflecting the higher interest rate expectations. Higher discount rate = lower valuation. Adjustment ensues.

Technical trading is just a part of it; my view is there tends to be an overshoot to bad or good news in the first day, often followed by a partial recovery. Used to be called a “dead cat bounce”

Can you answer this question. Would you rather have a hot economy with the risk of inflation or an economy cooling down?

[Tyga11]

Originally Posted by kscarrol

Can you show me where I said that? Having been in the finance world for almost three decades I simply pointed out that investors always have other opportunities/options to put their money to work. When rates were zero and folks couldn’t get a return in a savings account, CD or bonds then equities were the place to be. Now folks have some options. Investing is always about risk versus reward. For older folks who are retired or near retirement, getting 5% with essentially zero risk is appealing.

I’m fully invested and always have been with no bond holdings.

I thought you were implying something. My bad. Yes, the 5% returns have been there for awhile. 5% annual returns when inflation is running around 3% isn't that appealing IMO. I'd rather put seniors into high dividend paying stocks like T

[ASAP]

still the most confusing economy i've seen in my lifetime...

interest rates lowered, outlook for 1 more... net result so far - consumers hurt with lower savings rates and mortgate rates shooting up as 10 Y skyrockets... if this continues, we will see 9% mortgage rates soon lol... so far, this has only equated to corporate relief but the average consumer continues to get f'd... curious what this next admin will do... will we screw the little people and continue to reward prior asset holders and those invested in the s&p or will the little guy actually finally get a crumb? we have a diverging economy... if you are well off, you are well off... if you aren't then rest in peace and it seems no one is acknowledging this

i have a sneaky suspicion Trump will force the fed as ultimately he will need to by yelling rates need to be lowered without any understanding of how mortgage rates work... maybe Powell will get kicked and the next fed admin will be forced to buy MBS again who knows lol

[kscarrol]

Originally Posted by Tyga11

I thought you were implying something. My bad. Yes, the 5% returns have been there for awhile. 5% annual returns when inflation is running around 3% isn't that appealing IMO. I'd rather put seniors into high dividend paying stocks like T

I understand but that's what you want. You're young and have the time to ride out the ups and downs of the markets. Older folks may not so they look for safer investments that still offer a positive real return. Small, yes, but they're really looking for the cash flow/income that the bonds offer.

[MaxVO2]

Originally Posted by kscarrol

I’m fully invested and always have been with no bond holdings.

****Same. I'm no where near retirement and am 100% in stocks, stock mutual funds, ETF's, Closed End funds, and other stock based/equity based investment instruments.

I've done well with it. I guess bonds have their place, but many bond holders I know seem like they are always unhappy for whatever reason.

No doubt some have done well, I just don't know any of them. I guess they have less volatility which is important for older people or those already retired, or needing the money within 5 years, etc.. It would suck losing 20% plus of the value in a major market correction with stocks but the upside is sometimes equally remarkable if taken advantage of.

[c1pher]

I’m starting to take the cash I’ve been holding and buying again. I was keeping a good bit in VMFXX earning 4.5-5.25% with no risk. It’s time to start looking at numbers and see where the dips are. We don’t know how much lower things will go so I am kind of incrementally dipping my toes in the water so to speak.

[kscarrol]

Well since the Fed started raising rates back in '22, the price of bonds have fallen so holders of those bonds have seen the value of their investment go down, at least on paper.

[2000cs]

Originally Posted by Tyga11

Can you answer this question. Would you rather have a hot economy with the risk of inflation or an economy cooling down?

There are other choices. Of those two choices, I prefer a hot economy because I can manage inflation in my own expenses. But a growing economy with low inflation is possible.

[Tyga11]

Market is flat after a blow-out PPI.

There is still technical trading going on. Tomorrow will tell the story.

2000cs

kscarrol

[kscarrol]

No doubt but I'm not a trader...

[ASAP]

Originally Posted by Tyga11

Market is flat after a blow-out PPI.

There is still technical trading going on. Tomorrow will tell the story.

2000cs

kscarrol

blow out? i don't get why the market always spins reality...

it came in under expectations... however headline ppi at 3.3% is still high af... thats yoy when prices for many goods are at record highs

[chassis]

PPI all commodities YOY 1-handle. These are the good ole days.

[Tyga11]

Originally Posted by ASAP

blow out? i don't get why the market always spins reality...

it came in under expectations... however headline ppi at 3.3% is still high af... thats yoy when prices for many goods are at record highs

I'm not spinning anything. It was a very good report. I understand what headline is.

[Tyga11]

Originally Posted by chassis

PPI all commodities YOY 1-handle. These are the good ole days.

What do you mean by that?

[chassis]

Just that.