My 401K and stock investments took a massive hit back in 2007/2008. Not doing that again. If my cash is going to burn like that, may as well be in a pipe. :
:
:Postpone your PAD or TAD, buy stock instead!
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That's very true for a lot of people, that's why very few day trade; what I was referring to in this post, however, is to buy low and hold on to it. If what you are interested in is the long run trend (which most of us are), that trend is steeper the lower your starting prices are. This is why, whether you know it or not, by continually donating to a 401k or IRA on a regular basis (say monthly or something like that) you are buying into lows as well as highs...without also buying into those lows, your trend growth rate would be lower meaning you're making less money over time; so, in fact, you are doing exactly what you say you don't want to do because you're risk averse, you just don't know you're doing it.
That said, what I meant in my original post about stocks are currently at a "big time low" is not in fact the price of the stock, but the p/e ratios...those are what are so low right now for many reputable firms. For instance, Bank of America, for which I own a ton of stock over the long term and bought more of it yesterday, has a p/e ratio of 11! And this is the second largest bank in the US with assets worth $2.4 trillion, a market cap of $230 billion, and pays 2 1/2% in dividends! This p/e is way out of whack.
I'll say it again, many stocks are way undervalued right now, time to buy low and HOLD.
Piggybacking off of my last post...read that first just above
For those that are interested, here is a perspective from my TIAA-CREF chief investment strategist posted just yesterday
"In response, markets behaved as if the Fed had committed a policy error. Equities in particular sold off as investors hoping for a more dovish message questioned the wisdom of any further rate hikes given heightened market volatility and fears that the slowing U.S. economy could fall into recession.
We think the markets are mistaken. In our view, economic and corporate earnings fundamentals remain on solid footing, and we see little evidence of an impending recession or bear market. Moreover, we expect the divergence between volatile market behavior and steady economic data to resolve in favor of the data, as it has in every bull-market correction of the past decade.
It’s also worth noting that the Fed was dovish in a few key ways: It removed a third potential rate hike from its 2019 “dot plot” expectations, mentioned global economic and financial conditions in its statement, albeit obliquely, and added “some” in front of “further rate increases” to convey that this hiking cycle is almost done.
In short, the Fed was as dovish in its tone and forecasts as it could afford to be in an economy that is (a) growing well above potential, with (b) a 3.7% unemployment rate that remains well below the Fed’s 4.4% estimate of the longer-run rate at which the economy would be at full employment; and (c) roughly at-target (2%) inflation. Looking ahead, there’s room for the Fed to become more dovish, either by pausing in March or by removing the 2020 rate hike from its forecasts at some future date. We continue to expect two rate increases in 2019, probably in June and December.
What might the current Fed-driven market psychology mean for investors? Potential upside opportunity for those with patience to weather short-term turbulence. December’s downturn has contributed to more attractive pricing on equities and other risk assets. Indeed, S&P 500 valuations are at their lowest since August 2013, based on the next 12 months’ earnings estimates, and high yield bond spreads have gapped 90 basis points wider this month, to their widest level since July 2016."
For those that are interested, here is a perspective from my TIAA-CREF chief investment strategist posted just yesterday
"In response, markets behaved as if the Fed had committed a policy error. Equities in particular sold off as investors hoping for a more dovish message questioned the wisdom of any further rate hikes given heightened market volatility and fears that the slowing U.S. economy could fall into recession.
We think the markets are mistaken. In our view, economic and corporate earnings fundamentals remain on solid footing, and we see little evidence of an impending recession or bear market. Moreover, we expect the divergence between volatile market behavior and steady economic data to resolve in favor of the data, as it has in every bull-market correction of the past decade.
It’s also worth noting that the Fed was dovish in a few key ways: It removed a third potential rate hike from its 2019 “dot plot” expectations, mentioned global economic and financial conditions in its statement, albeit obliquely, and added “some” in front of “further rate increases” to convey that this hiking cycle is almost done.
In short, the Fed was as dovish in its tone and forecasts as it could afford to be in an economy that is (a) growing well above potential, with (b) a 3.7% unemployment rate that remains well below the Fed’s 4.4% estimate of the longer-run rate at which the economy would be at full employment; and (c) roughly at-target (2%) inflation. Looking ahead, there’s room for the Fed to become more dovish, either by pausing in March or by removing the 2020 rate hike from its forecasts at some future date. We continue to expect two rate increases in 2019, probably in June and December.
What might the current Fed-driven market psychology mean for investors? Potential upside opportunity for those with patience to weather short-term turbulence. December’s downturn has contributed to more attractive pricing on equities and other risk assets. Indeed, S&P 500 valuations are at their lowest since August 2013, based on the next 12 months’ earnings estimates, and high yield bond spreads have gapped 90 basis points wider this month, to their widest level since July 2016."
Because some pipe smokers think about other things than just smoking pipes...which is apparently all you do. By the way, no one is forcing you to participate in this discussion, simply ignore it...it's easy...
You are correct; after I posted the initial thread yesterday I noticed I should have posted it in the 'general discussion' area...I'm relatively new on this forum and I made a mistake...not all of us pretend to be MacArthur and live with perfection all the time.
LOL, that pretty much sums it up pitchfork!!! If they knew what they were doing, and knew they needed to be at 3% rates, they would just raise them to that level. Problem is, they don't know what they are doing and that's why we get these little 1/4 point increases. Quite a few Keynesians in the economics department where I work and we always get into this very discussion...I'm going to print out your response and post it on my office door! :D
A very interesting thread. Comments from Stephen Moore,
"In one of the most remarkable Abbott and Costello routines in modern times, the economic wizards at the Fed again raised interest rates on Tuesday. Their cracker jack logic for doing so is to steer America on a course toward recession so they have the tools in hand to end the recession that THEY themselves created. Can anyone tell us who’s on first?
The Fed had already reduced the monetary thrust that it provides to the economy 8 times since December 15, 2015, by raising its Fed Funds interest rate from 0.25% to 2.25%. Each time, the Fed claimed that it needed to guard our economic airliner from inflationary “overheating” – as if its job is to prevent too many people from working and making sure that pay checks aren’t rising too quickly.
Since its peak on October 3, which, not coincidentally, was right after Chairman Powell gave a speech suggesting that the Fed might be through tightening money, the Dow has fallen by more than 3,500 points [now 4,500]. Market fears about his bad judgment have cut the value of all U.S. stocks by about $4.5 trillion...
Since the last rate hike the economy has slipped into an anti-growth deflationary cycle with commodity prices – oil, copper, cotton, lead, steel, silver among others – falling by about 10 percent. The new Fed policy is sure to accelerate the deflation and farmers, ranchers, coal miners, oil and gas drillers will get further crunched by the dollar shortage. Can someone at the Fed Temple please explain how falling commodity prices indicates inflation? Inflation is too many dollars chasing too few goods.
Mr. Powell warned of a slowing economy in 2019 – but he failed to acknowledge that the headwinds the economy is facing are the drag the Fed is itself creating."
"In one of the most remarkable Abbott and Costello routines in modern times, the economic wizards at the Fed again raised interest rates on Tuesday. Their cracker jack logic for doing so is to steer America on a course toward recession so they have the tools in hand to end the recession that THEY themselves created. Can anyone tell us who’s on first?
The Fed had already reduced the monetary thrust that it provides to the economy 8 times since December 15, 2015, by raising its Fed Funds interest rate from 0.25% to 2.25%. Each time, the Fed claimed that it needed to guard our economic airliner from inflationary “overheating” – as if its job is to prevent too many people from working and making sure that pay checks aren’t rising too quickly.
Since its peak on October 3, which, not coincidentally, was right after Chairman Powell gave a speech suggesting that the Fed might be through tightening money, the Dow has fallen by more than 3,500 points [now 4,500]. Market fears about his bad judgment have cut the value of all U.S. stocks by about $4.5 trillion...
Since the last rate hike the economy has slipped into an anti-growth deflationary cycle with commodity prices – oil, copper, cotton, lead, steel, silver among others – falling by about 10 percent. The new Fed policy is sure to accelerate the deflation and farmers, ranchers, coal miners, oil and gas drillers will get further crunched by the dollar shortage. Can someone at the Fed Temple please explain how falling commodity prices indicates inflation? Inflation is too many dollars chasing too few goods.
Mr. Powell warned of a slowing economy in 2019 – but he failed to acknowledge that the headwinds the economy is facing are the drag the Fed is itself creating."
There are people that make a lot of money buying up stocks that others dump when they panic and sell low. I don't put money that I think I'll need within the next 5 years into stocks. If people back in 2008/9 would have stayed put and not sold, their stock investments would have tripled since then. Leaving too much sitting in cash or fixed income can be as dangerous as anything in the long run. Just my 2 cents.
The trick is to not be greedy. Start learning and investing in yous late 20's, early 30's and, with a bit of luck, plus a lot of perseverance, your Social Security check can go entirely for blends and pipes. And, it's true, it's never too early to start an IRA. But, keep a close watch on your IRA, they can go south and there are warning signs. The big one is performance. If your IRA begins to perform under the average ... find out why.
If the Feds' actions are disconcerting, look around and invest moneys in places not heavily influenced by the actions of the Feds. Again, a lot of self-education and time is required. Making money, other than salary, is not something a lot of people are interested in. A wise choice if one is not willing to invest the time to learn or, take the risk.
But, by and large, a careful investor will slowly increase his/her net worth over the decades. A good net worth means better rates at the bank and access to "other peoples" money. Always a good thing. Should other money be too expense, use your own moneys if the investment is too good to pass up. Nothing like risking your own moneys to keep your attention.
Poor investing, lack of research and education, is also a great way to turn a million dollars into a couple of hundred. IRAs are not "invest and forget." No investment should be.
If the Feds' actions are disconcerting, look around and invest moneys in places not heavily influenced by the actions of the Feds. Again, a lot of self-education and time is required. Making money, other than salary, is not something a lot of people are interested in. A wise choice if one is not willing to invest the time to learn or, take the risk.
But, by and large, a careful investor will slowly increase his/her net worth over the decades. A good net worth means better rates at the bank and access to "other peoples" money. Always a good thing. Should other money be too expense, use your own moneys if the investment is too good to pass up. Nothing like risking your own moneys to keep your attention.
Poor investing, lack of research and education, is also a great way to turn a million dollars into a couple of hundred. IRAs are not "invest and forget." No investment should be.
Don’t invest in something that you don’t understand. I’ve done much better with real estate. But, my “portfolio” is diversified so as to reduce my exposure to any one thing. The one truism is pigs get slaughtered.
Economist- Your advice might be ok for someone who closely follows the markets and has active control over their account. With some skill and a lot of luck, you could pick off stocks and do well in the turmoil.
However, there are a lot of indicators that the markets are not going to do so well in the coming years. It's been a great party, but now a lot of people are going to get burned. Especially those with financial advisors who inflate their skills. You don't need to be particularly skilled to know that stocks (and a lot of real estate deals) are due for a massive correction. The timing is another issue, but unless you like to gamble, going whole hog on stocks right now is really bad advice. That's just my opinion, of course.
In short, it has been easy to make money for the past 10 years, which makes just about anyone doing well in the markets to claim they know the score. Now that things are going to get tricky, we will see who has the best strategies.
My investments are spread around a few different countries. In one region, I moved to a full cash position some months ago and saved a bundle of money. I also backed out of a real estate deal when the signs started emerging and prices there have fallen 10-15%. You need to be damn careful.
I am not a professional, but I do have some well informed friends who have warned me and frankly, I'm very glad I heeded their advice. I don't have any investments in the U.S., but globally, if you pay any attention to what some large funds are doing, they are quietly moving to very safe positions. There is a reason for this move. If you're not a seasoned day trader who can quickly respond to the markets with skill and not the luck that *everyone* has had for the past 10 years, stocks are a very risky bet right now.
Generally speaking of course.
Good luck though. With my "savings" by not losing what I would have should I have kept my positions, I've had a comfortable pillow for buying new pipes, tobacco and sleeping sound at night. The idea of buying stocks right now is horrific to me. I'll reconsider when the dust settles.
I only respond to this in case anyone is reading and considering entering a position right now. My advice is to look for the opinions that differ from your own (especially if you're seeing dollar signs) and read a lot of them. Right now, I'd say money in the bank is the best option and then you will be prepared to make a good entry when the shit hits the fan... which it seems very likely to do in the next 1-3 years. Of course, you'll read other opinions.
However, there are a lot of indicators that the markets are not going to do so well in the coming years. It's been a great party, but now a lot of people are going to get burned. Especially those with financial advisors who inflate their skills. You don't need to be particularly skilled to know that stocks (and a lot of real estate deals) are due for a massive correction. The timing is another issue, but unless you like to gamble, going whole hog on stocks right now is really bad advice. That's just my opinion, of course.
In short, it has been easy to make money for the past 10 years, which makes just about anyone doing well in the markets to claim they know the score. Now that things are going to get tricky, we will see who has the best strategies.
My investments are spread around a few different countries. In one region, I moved to a full cash position some months ago and saved a bundle of money. I also backed out of a real estate deal when the signs started emerging and prices there have fallen 10-15%. You need to be damn careful.
I am not a professional, but I do have some well informed friends who have warned me and frankly, I'm very glad I heeded their advice. I don't have any investments in the U.S., but globally, if you pay any attention to what some large funds are doing, they are quietly moving to very safe positions. There is a reason for this move. If you're not a seasoned day trader who can quickly respond to the markets with skill and not the luck that *everyone* has had for the past 10 years, stocks are a very risky bet right now.
Generally speaking of course.
Good luck though. With my "savings" by not losing what I would have should I have kept my positions, I've had a comfortable pillow for buying new pipes, tobacco and sleeping sound at night. The idea of buying stocks right now is horrific to me. I'll reconsider when the dust settles.
I only respond to this in case anyone is reading and considering entering a position right now. My advice is to look for the opinions that differ from your own (especially if you're seeing dollar signs) and read a lot of them. Right now, I'd say money in the bank is the best option and then you will be prepared to make a good entry when the shit hits the fan... which it seems very likely to do in the next 1-3 years. Of course, you'll read other opinions.
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