Quote: (12-23-2018 02:53 PM)Shinebox Wrote:  

Going from 2.25 to 2.5 isn't some kind of gaff. In a decent economy, this is a nothingburger. The fact that people are trying to bully Powell into changing his course is the proof that his course is correct. Push that shit to five tomorrow and let's get this circus over with. Pull-off the band-aid. Can't fight gravity or math. The day of reckoning will come.

Quote: (12-23-2018 11:18 AM)edlefou Wrote:  

This isn't Volcker having the balls to push interest rates into the stratosphere in the 70s to get runaway inflation under control.

The Fed's monetary policy is supposed to adjust interest rates in order to keep inflation under control, provide liquidity, and keep the economy from overheating.

This guy decided to jack up interest rates when the current inflation rate is fine and the markets tanked.

At best the rate hike was a mistake, at worst it was a politically-motivated move to fuck with Trump.

Interest rates are abnormally low given the current levels of unemployment. Look over the last few decades of interest rates.



We go up a tiny nudge and there are rumors of the President wanting to fire the Fed Chief. That is madness. The mistake was keeping them near zero for so long.

If the economy can't handle a less than 1% real interest rate (accounting for inflation) then it's further proof that this entire recovery has been built on a house of cards and funny money. Savers have been getting the shaft in order to let corporations, the government, and irresponsible consumers go on a debt binge for the last decade. The party has to end at some point. The longer we delay the more pain we will have in the future as an even bigger debt bubble bursts.

Not to mention that without higher rates then the Fed has less room to maneuver when the recession hits.

>>Isn't anything around 30% a depression?

1962 and 1969 declines were close to 30%, depending on how you measure. Economy was far more robust then than now. 1973-1974 decline was accompanied by recession, but hardly depression, and over 40% market decline. 40% off 2900 = 1740, which is not really cheap for the SP500, more like fair price. Remember how leveraged many of these stocks are. Any decline whatsoever in earnings before interest will be multiplied when it comes to shareholder earnings.

Quote: (12-21-2018 12:35 AM)The Black Knight Wrote:  

It should be a big, BIG warning to everyone that the largest economy in the world, which has had cheap debt (low interest rates/free money when accounting for inflation) for around a decade, can't handle a modest increase in interest rates without having a major panic attack.

The entire world economy has been propped up on cheap debt and there is gong to be a crash of epic proportions sometime in the near future.

Some major areas of concern:

1. Entire sectors like the tech sector for example, basically can't function without access to cheap debt. Anyone who has worked in tech can tell you about the many joke companies that still exist with tons of revenue but haven't been profitable for years. That bullshit can only last in a world with cheap debt. Silicon Valley culture has been drunk for long time on keeping alive non-sustainable business models. A reckoning is coming.

2. Emerging markets are having massive currency issues. What happens if they default due to weak currency/strong dollar? What happens to their ability to purchase exports?

Quote:Quote:

Over $200 billion of USD-denominated bonds and loans issued by emerging market governments and companies will come due during the remainder of 2018, according to the Wall Street Journal. About $500 billion will come due in 2019. They will need to be paid off or refinanced.

https://seekingalpha.com/article/4199297...arket-debt

3. The EU, fiscally speaking, is a disaster. It's a realistic possibility that Italy could pull the pin any day, leave the Euro to get control of their country back (they have not benefited at all from the Euro), and blow up the EU/Euro in the process. Politically, Hungary and other countries might quit the EU eventually after getting bullied and stripped of their EU power because they won't bend the knee to globalist migration bullshit. Shit, look at the whole Yellow Vest deal recently. The EU has an economy around the size of the USA and is hot and ready to pop from multiple directions.

4. Brexit? - Hard exit/soft exit? Who knows.

5. Muller investigation ending with bullshit charges and/or Democrat overt coup originating from the House? - Very real possibilities.

6. Entitlement spending in US federal/state/local governments is going to explode over the next decade as we hit Peak Baby Boomer. Federal SS/Medicare/Medicaid spending is 2 TRILLION dollars or thereabouts right now. Federal revenues are around 3.5 Trillion. And interest rates are going up = debt payment expenses are going to increase.

7. China Trade War - The largest economies in the world in a overt fiscal war is a real possibility.

8. China internal issues/housing/debt - 1 in 5 apartments/housing units in urban areas (need to double check the urban areas bit) in China are unoccupied and much of the populace holds their overall net worth in housing; including 2nd and 3rd properties. The gov't has been propping up the housing market to keep the house of cards together. What happens if China has their own version of a housing related financial crisis?

This is just a sampling of how many fucked up things are floating around out there in the the overall world economies right now that could trigger a major economic crash. We honestly need a hard reset back down to reality, one that should have occurred in 2008-2009 (which was postponed), but I'd be wary of being invested in the market right now.

I feel like if you buy now, you're basically buying right before the financial 2008 crisis or the dot com crash. Sure, you could make some gains but why not just wait it out a bit longer and catch the amazing bargain prices when the REAL freaking out starts.

Great analysis.

The only point I disagree is that you shouldn't invest now. We are living in a very globalised world, in which financial crisis can spread fast.

Imagine one of your points raised above, for example the implosion of the EU, happens, then this will by itself trigger many other effects. Maybe Japan with ~250% debt to GDP and an ageing population will implode next. By then a lot of smaller countries would collapse as well, finally reaching your own country of residence.

In such a worst case scenario, the majority companies will run some sort of emergency plan (laying of employees, reducing factory output) or even go straight into bankruptcy. I highly doubt, that national currencies like the Japanese Yen or the US Dollar will be worth anything in such a scenario. More likely we would face civil war.

Therefore, take the chance and invest now. Because if we are going to run into a crash, it is going to be the biggest one the world has ever seen and by then I worry about my security and how to secure food rather than some $$$.

Quote: (12-23-2018 04:19 PM)semibaron Wrote:  

Great analysis.

The only point I disagree is that you shouldn't invest now. We are living in a very globalised world, in which financial crisis can spread fast.

Imagine one of your points raised above, for example the implosion of the EU, happens, then this will by itself trigger many other effects. Maybe Japan with ~250% debt to GDP and an ageing population will implode next. By then a lot of smaller countries would collapse as well, finally reaching your own country of residence.

In such a worst case scenario, the majority companies will run some sort of emergency plan (laying of employees, reducing factory output) or even go straight into bankruptcy. I highly doubt, that national currencies like the Japanese Yen or the US Dollar will be worth anything in such a scenario. More likely we would face civil war.

Therefore, take the chance and invest now. Because if we are going to run into a crash, it is going to be the biggest one the world has ever seen and by then I worry about my security and how to secure food rather than some $$$.

I'm not sure about the above strategy. Cash is a risk free 2% return right now, while assets are declining in value. Once the Fed starts up the printing presses then the USD will decline but for now, it should be ok. Other than gold, there aren't many other assets that investors flee to during a financial crisis other than dollars and treasuries.

I'm glad you brought up Japan though - how is it that their Central Bank has crashed interest rates and run the printing presses like crazy and the Yen has maintained its value? This is the only thing making me hold off on totally writing off the dollar once QE4 starts up again. 250 debt to GDP ratio is nuts, with a declining population they can't hope of ever paying that back.

If you think this is a world-ending type of crash, then gold, guns, farmland, medicine, and water are your best assets, not mutual funds or ETFs or condos.

The Fed should have built more comfort before escalating.

Even moreso given the volatility in the stock market over the last few months.

As long as inflation and unemployment are under control and the economy isn't growing too fast there's no reason the Fed couldn't have waited a couple more months before the next increase.

There's always a crash around the corner and it's the Fed's job to avoid it and make a soft landing for the economy, i.e., build comfort, get the pussy wet, slide it in.

Based on the market's reaction, most agree. The Fed moved too quick and got some ASD.

Quote: (12-23-2018 03:49 PM)Arado Wrote:  

Quote: (12-23-2018 02:53 PM)Shinebox Wrote:  

Going from 2.25 to 2.5 isn't some kind of gaff. In a decent economy, this is a nothingburger. The fact that people are trying to bully Powell into changing his course is the proof that his course is correct. Push that shit to five tomorrow and let's get this circus over with. Pull-off the band-aid. Can't fight gravity or math. The day of reckoning will come.

Interest rates are abnormally low given the current levels of unemployment. Look over the last few decades of interest rates.

We go up a tiny nudge and there are rumors of the President wanting to fire the Fed Chief. That is madness. The mistake was keeping them near zero for so long.

If the economy can't handle a less than 1% real interest rate (accounting for inflation) then it's further proof that this entire recovery has been built on a house of cards and funny money. Savers have been getting the shaft in order to let corporations, the government, and irresponsible consumers go on a debt binge for the last decade. The party has to end at some point. The longer we delay the more pain we will have in the future as an even bigger debt bubble bursts.

Guys get into short ETF's.
Invested in a ton today and just got 6% return on em. All went very green and basically followed the same pattern. Do some research on what ETF's to buy, and when to buy and sell. There may be an upcoming rally soon. There will be more crashes as well. These ETF's are easy money at this point.

Quote: (12-24-2018 08:22 AM)edlefou Wrote:  

There's always a crash around the corner and it's the Fed's job to avoid it

Are you kidding? The Fed wants a bigger crash. They are orchestrating the entire thing. No, I'm not even conspiracy-theorizing. It's just very clear. They want it to crash because they are trying to kill off Trump. Plus the press is screaming doom every microsecond.

Quote: (12-24-2018 05:42 PM)MrLemon Wrote:  

Quote: (12-24-2018 08:22 AM)edlefou Wrote:  

There's always a crash around the corner and it's the Fed's job to avoid it

Are you kidding? The Fed wants a bigger crash. They are orchestrating the entire thing. No, I'm not even conspiracy-theorizing. It's just very clear. They want it to crash because they are trying to kill off Trump. Plus the press is screaming doom every microsecond.

I`m not sure they want a crash, but rather a long and steady recession that last all the way until election day in 2020. In an isolated sense Powell and the Fed are doing the right thing, but is it about politics rather than economics?

I have a target for 2019. Bitcoin 1k and SP 1600-2000.'Market erasing Trump bubble from 1800'

Quote: (12-24-2018 05:46 PM)Johnnyvee Wrote:  

Quote: (12-24-2018 05:42 PM)MrLemon Wrote:  

Quote: (12-24-2018 08:22 AM)edlefou Wrote:  

There's always a crash around the corner and it's the Fed's job to avoid it

Are you kidding? The Fed wants a bigger crash. They are orchestrating the entire thing. No, I'm not even conspiracy-theorizing. It's just very clear. They want it to crash because they are trying to kill off Trump. Plus the press is screaming doom every microsecond.

I`m not sure they want a crash, but rather a long and steady recession that last all the way until election day in 2020. In an isolated sense Powell and the Fed are doing the right thing, but is it about politics rather than economics?

Bingo. The last thing the Deep State wants is a true "crash" or "dollar crisis" that doomsdayers like Peter Schiff keep rambling about. I was concerned about this a couple years ago but when they kept flipping out over the slightest dip and changing their story, then I was like ok these people are full of shit.

By truly crashing the economy you provide an opportunity for said nation to restart anew. Maybe for somewhere like Greece or Venezuela it doesn't matter, but the United States of Fucking America is a different story. We still have the most powerful military by far, millions of citizens armed, and Donald J. Trump as our commander-in-chief. Let's say a real crash does happen. My bet is that Trump tries to make some ballsy moves (i.e. question the Fed's existence and purpose) - he's already starting to blame the Fed and pull troops back home. Sure the Deep State can assassinate him. But you better bet there are people in the military and citizens that will take action. There is already a very real movement ongoing in France. Things can spiral out of the Deep State's control very quickly.

The slow burn recession is most likely. Maybe on par with 08 or even not as severe. However, the media will make every effort to make it SEEM like it's horrendous. That way, people don't feel so much pain in reality so as to be prompted to take meaningful action, but might get convinced when it comes to election day. One thing I already know they will try to pull is to whip out the "real" unemployment numbers if and when the recession begins in earnest and companies start laying off. We've known for years how full of shit these numbers are, and Trump himself repeatedly brought them up during his campaign. But we've seen how reckless the media is when they throw stuff out, so they will depend on people's short memory regarding this subject. Unemployment numbers will seemingly explode only because they're counting it differently. And the board is set on social media to try and prevent this information from reaching the masses like in the Great Meme War.

I told you boys, it might be a while, but the market is going higher. We are nowhere near a recession.

Quote: (12-24-2018 05:46 PM)Johnnyvee Wrote:  

Quote: (12-24-2018 05:42 PM)MrLemon Wrote:  

Quote: (12-24-2018 08:22 AM)edlefou Wrote:  

There's always a crash around the corner and it's the Fed's job to avoid it

Are you kidding? The Fed wants a bigger crash. They are orchestrating the entire thing. No, I'm not even conspiracy-theorizing. It's just very clear. They want it to crash because they are trying to kill off Trump. Plus the press is screaming doom every microsecond.

I`m not sure they want a crash, but rather a long and steady recession that last all the way until election day in 2020. In an isolated sense Powell and the Fed are doing the right thing, but is it about politics rather than economics?

The Fed is supposed to engineer a smooth landing, but looking at their actions they're trying to tank the economy to fuck with Trump.

I'm not a conspiracy theorist, but I don't see any other way of interpreting it.

The hedge funds/bankers/elites will profit from the volatility and regular citizens will get fucked.

Quote: (12-25-2018 11:36 AM)edlefou Wrote:  

Quote: (12-24-2018 05:46 PM)Johnnyvee Wrote:  

Quote: (12-24-2018 05:42 PM)MrLemon Wrote:  

Quote: (12-24-2018 08:22 AM)edlefou Wrote:  

There's always a crash around the corner and it's the Fed's job to avoid it

Are you kidding? The Fed wants a bigger crash. They are orchestrating the entire thing. No, I'm not even conspiracy-theorizing. It's just very clear. They want it to crash because they are trying to kill off Trump. Plus the press is screaming doom every microsecond.

I`m not sure they want a crash, but rather a long and steady recession that last all the way until election day in 2020. In an isolated sense Powell and the Fed are doing the right thing, but is it about politics rather than economics?

The Fed is supposed to engineer a smooth landing, but looking at their actions they're trying to tank the economy to fuck with Trump.

I'm not a conspiracy theorist, but I don't see any other way of interpreting it.

The hedge funds/bankers/elites will profit from the volatility and regular citizens will get fucked.

If Trump can`t convince (or get rid of in some way) Powell to change the Fed policy, I really don`t see much upside in the US market. If the Fed increases the rate to 2.5, I think we could see an escalation where it starts to look like a serious crash.

My best guess is that they won`t do that. I`d be surprised if the Fed doesn`t cave and lower rates again, otherwise it`s adios Trump 2020.

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

I think we are long overdue for a crash, it's been 10 years since the Big Bailout

Does that imply that capital markets downturns are time-based, rather than linked to economic fundamentals? If so, what is the exact "time" in which a recession is indicated? Did you know Australia has gone over 25 years without a recession? If not, why mention it?

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

most banks and corporations are back to their old tricks.

What """Tricks""" are those? Are you sure these are "tricks", and not people simply behaving in their own economic self-interest, which is the fundament of capitalism, and which happens pretty much every day, in every arena of the natural world?

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

Stock buybacks with free (<1% interest) govt money

The shortest of the short term rates, the fed funds rate, is presently 2.25-2.50%...which corporation borrows at < 1% currently?

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

Manufacturing has only recently made a big comeback.

Which reads to normal people, "Manufacturing has recently made a big comeback".

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

Quantitative Easing has proven to be a total disaster and one of the biggest robberies in the history of the world

So you should be happy that it's been over for some time, no?

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

...and now that interest rates are going back up and the free money party is coming to an end with the Fed raising interest rates, corporations are freaking out.

Guess not :/

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

They've been borrowing trillions of dollars since Obama's first term, at near 0% interest rates, and using that money to buyback their own stocks and artificially inflate their own value to record levels. Now that the Fed has been raising interest rates again, that bill is coming due and many corporations will be going bankrupt again and trying to bail themselves out.

What "bill", exactly, "comes due" when a company buys back its own stock?
Also: You do realize that the Fed only sets the short end of the curve, the market sets the long end of the curve, and that the 10 yr is all the way up to....2.74%, right? Historically among the lowest its ever been in an expansion. Liquidity is strong and few companies have had trouble rolling their debt, unless they have had fundamental issues that should prevent them from doing so (i.e., exactly how the system was intended to work).

Quote: (12-20-2018 02:47 PM)DamienCasanova Wrote:  

There are 2 economies in the USA, Wall St vs Main St, and there is quite a disconnect between Wall Street & Main Street, our REAL economy has been on fire the last 2 years, The real US economy, manufacturing, farming, producing goods will likely keep expanding and keep consumer prices level, while corporate executives are going to start jumping out of buildings again (hopefully).

I read: "There are two types of people in the U.S. - people with some combination of smarts, work ethic, guts, ambition and/or entrepreneurship that allows them to make more than the average income, and those with few or none of the above which results in them making less than the average. The latter group also make an other thing: Incoherent and uninformed posts on economics that wreak of jealousy.

Quote: (12-20-2018 09:12 PM)Mr. Accuride Wrote:  

I am now 100% short.

Lemme guess...you were also very long on bitcoin with a substantial allocation of your portfolio once, weren't you? And you smoke/gamble/take pills or show other indicators of an addictive personality, don't you? The reason i say the latter is that what you're doing is extremely dangerous/aggressive gambling. Usually people who do that exhibit addictive behavior in other aspects of their lives.

Quote: (12-21-2018 12:16 AM)Shinebox Wrote:  

This 10 year run since the financial collapse of 08 is unprecedented in modern financial history.

http://fortune.com/2016/03/02/australia-recession/

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

One of the best-ever books on the stock market is Burton G. Malkiel's "A Random Walk Down Wall Street," which has been re-printed in eleven editions since it first came out in 1973.

THANK YOU FOR POSTING THIS!! If there is anything this thread needs, its a well-researched bible of investing history to use as a lens through which to view the current volatility.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

In one chapter, he makes the point that the market always heads into a tailspin when interest rates are raised.

I have read this book several times, and such demonstrative claims ("when x happens, y always follows") strike me as the exact antithesis of Malkiel's research. Just to be sure, i pulled out my copy (2015 version) and looked for any language on interest rates, federal reserve actions - anything close to what you said.

Here is Malkiel's actual language on the topic of Federal Reserve hikes:

"The [1929] crash itself, in [Bierman's] view, was precipitated by the Federal Reserve Board' policy of raising interest rates to punish speculators".

That's all I saw, but feel free to quote the book directly is you saw something I missed.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

The hard part will be finding where the bottom is and buying in then. We had a mini-pullback in Jan.-Feb. 2016, and I missed major buying opportunities. I'm gonna try to do better this time.

It's like you read this wonderful book, and didn't internalize any of it! The THEME of the book is: Capital markets are random. Don't jump in and out. Have a diversified portfolio of stocks and bonds and add to it consistently over time.

And that's the last thing I hope to say on this thread: All the nay-saying, know-nothing posts, conspiracy theory posts, etc - it's maddening.

Malkiel's book is indeed one of the best (some say the best) investment book ever written. Or read "The Intelligent Investor" by Benjamin Graham (Warren Buffet's mentor). Or pretty much anything written by Buffet. They all say what most of you (the smart ones) know intuitively: Timing the market is a sucker's bet, for gambling addicts. Invest over the long term, and DIVERSIFY: Stock index funds, bond index funds, etc. Don't over-invest in any one stock, or sector, and don't jump in and out of the market.

Quote: (12-23-2018 01:12 PM)redpillage Wrote:  

Quote: (12-21-2018 03:24 PM)Deepdiver Wrote:  

FYI Example SPY Calls at 3:21PM EDT 21/Dec/2018
SymbolLastPrice$ Change$ Change% Qty  PriceWhenAdded DateAdded TotalGain$ TotalGain% Value $

SPY Mar 29 19 $260 Call4.30-0.83 -16.18%15.7012/20/2018-188.00-32.98%430.00
SPY Mar 29 19 $270 Call1.57-1.03 -39.62%12.7212/20/2018-115.00-42.28%157.00
SPY Jan 18 19 $290 Call0.030.0150.00%13.3505/08/2018-332.00-99.10%3.00
SPY Jan 18 19 $300 Call0.01-0.01 -50.00%11.3505/08/2018-134.00-99.26%1.00

I will be buying some 260 and 270 Calls for the Run back up to MW4 at 2600

Don't do that. See those percentages in your option chain segment? That's implied volatility which will get crushed on the way up and massively affect your premiums. What you CAN do instead is to grab an in the money (ITM) debit spread (look it up) that renders you somewhat vega neutral. Also, you don't want to buy January puts as theta burn (time value depreciation) will start going exponential. Unless you really know what you're doing don't ever buy any options that have less than 30 days until expiration.

Good luck ;-)

RP - good points I was in a hurry and just copied and pasted the current calls on my watch list to show they had dropped significantly with the impulsing major wave three down... with a likely subsequent Major Wave 4 Rebound...

In practice I never buy less than 90 day Puts or Calls and that is after confirming market top and bottom wave turns... if the time premium is not too expensive I prefer 6 month options - My June 2019 SPY 200 Puts I was holding for fliers for the MW5 Down leg were up about 105% briefly on Friday and after I fat fingered my Limit Sell I managed to capture 93% in about 4 days money at risk - always take profits when they come as they always erode when things come back to balance - so the discipline is to confirm turns and direction of trend - giving up some % and trade options with a 3 to 6 month expiration that can benefit from both the intrinsic value and longer-term time decay - the rate of acceleration also has a rather dramatic effect on price - idea to capture acceleration is to buy out of the money with target near or at the money for max return. Of course, you pay extra for that time premium but in markets with 50+ Daily and 90+ Weekly Average True Range (20 Day SMA) volatility you can justify longer time premiums and they tend to spike more with up or down acceleration.

Is the once great GE Going to be flushed down the toilet - NO, is it going to be sold to China for pennies HELL NO - WHY you Ask? Because GE is approx #39 on the Federal Top 100 Prime DoD Contractors list...

New CEO Culp used TSP Toyota Supply Program basically the new ISO/Deming Stats Quality Control/JIT to create 400% returns for Danaher Stakeholders and he is doing same now to Turn Around GE...

One of the tried and true two to 10 bagger+ strategies is to invest in previously great companies now on hard times but ripe for a turnaround. GE was $33.00 in July 2016 - trading today 26Dec2018 at 6.81 and 52 week low was several days ago at 6.66.

The VPVR POC on the 3 year daily chart from the above swing high to current swing low is in fact 30.34 and the 12 month POC is 13.81, therefore, the $15.00 calls had quite a bit of open interest outstanding holds of 228,158 on this option.

Therefore these 12 month in the future GE $15 Call options have a low time premium for the potential returns...

10 Call Options allows you to control 1,000 GE shares for only $155.00 and when it rebounds with some improving news over the next 4 quarters the returns on these options could be in the 5X to 10X range.

DateOrderTypeOrder typeQuantitySymbolPrice typeTermPricePrice
12/26/18630Option
Buy Open
10
GE Jan 17 '20 $15 Call
MktDayMkt
0.15

Total price $159.95 including commission on 10 GE Call Options

Quote: (12-25-2018 08:58 PM)The Father Wrote:  

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

One of the best-ever books on the stock market is Burton G. Malkiel's "A Random Walk Down Wall Street," which has been re-printed in eleven editions since it first came out in 1973.

THANK YOU FOR POSTING THIS!! If there is anything this thread needs, its a well-researched bible of investing history to use as a lens through which to view the current volatility.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

In one chapter, he makes the point that the market always heads into a tailspin when interest rates are raised.

I have read this book several times, and such demonstrative claims ("when x happens, y always follows") strike me as the exact antithesis of Malkiel's research. Just to be sure, i pulled out my copy (2015 version) and looked for any language on interest rates, federal reserve actions - anything close to what you said.

Here is Malkiel's actual language on the topic of Federal Reserve hikes:

"The [1929] crash itself, in [Bierman's] view, was precipitated by the Federal Reserve Board' policy of raising interest rates to punish speculators".

That's all I saw, but feel free to quote the book directly is you saw something I missed.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

The hard part will be finding where the bottom is and buying in then. We had a mini-pullback in Jan.-Feb. 2016, and I missed major buying opportunities. I'm gonna try to do better this time.

It's like you read this wonderful book, and didn't internalize any of it! The THEME of the book is: Capital markets are random. Don't jump in and out. Have a diversified portfolio of stocks and bonds and add to it consistently over time.

And that's the last thing I hope to say on this thread: All the nay-saying, know-nothing posts, conspiracy theory posts, etc - it's maddening.

Malkiel's book is indeed one of the best (some say the best) investment book ever written. Or read "The Intelligent Investor" by Benjamin Graham (Warren Buffet's mentor). Or pretty much anything written by Buffet. They all say what most of you (the smart ones) know intuitively: Timing the market is a sucker's bet, for gambling addicts. Invest over the long term, and DIVERSIFY: Stock index funds, bond index funds, etc. Don't over-invest in any one stock, or sector, and don't jump in and out of the market.

"The case for tightening credit before a major rise in the general inflation rate rather than afterward is that the longer the delay, the greater the eventual pain is likely to be in terms of lost economic output and rising unemployment. And so the central bank restricted credit and engineered a rise in interest rates. The hope was that further rises in property prices would be choked off and the stock market might be eased downward.
Interest rates, which had already been going up during 1989, rose sharply in 1990. The stock market was not eased down: Instead, it collapsed. "

"Again in 1987, interest rates rose substantially, preceding the great stock market crash of October 19. "

"On the other hand, when interest rates are very low, fixed-interest securities provide very little competition for the stock market and stock prices tend to be relatively high. During the 1990s, when bank rates on certificates of
deposit fell to 4 percent or less and long-term rates on U.S. Treasury securities fell to less than 6 percent, money poured out of the banks and the bond markets and into the stock market. This pushed up stock prices and, thus, provided justification for the last rule of the firm-foundation theory:
Rule 4: A rational investor should be willing to pay a higher price for a share, other things being equal, the lower are interest rates."

"Higher risk and higher interest rates tend to pull them down. There is a logic to the stock market, just as the firm foundationists assert."

"Changes in interest rates also systematically affect the returns from individual stocks and are important nondiversifiable risk elements. To the extent that stocks tend to suffer as interest rates go up, equities are a risky investment, and those stocks that are particularly vulnerable to increases in the general level of interest rates are especially risky".

"will be sensitive to the tendency of certain stocks to be particularly affected by changes in interest rates."

"First, an increase in the rate of inflation tends to "increase interest rates and thus tends to lower the prices of some equities, as just discussed."

"The volatility of interest rates constitutes a prime economic influence on share
prices".

"Specifically, when interest rates go up, share prices should fall, other things being the same, so as to provide larger expected stock returns in the future. Only if this happens will stocks be competitive with higher-yielding bonds. Similarly, when interest rates fall, stocks should tend to rise, because they can promise a lower total return and still becompetitive with lower-yielding bond"

"Obviously, in any given period there are many influences on stock prices apart from interest rates, so one should not expect to find a perfect correspondence between movements of interest rates and stock prices. Nevertheless, the tendency of interest rates to influence stock prices could account for the sorts of return reversals that have been found historically, and such a relationship is perfectly consistent with
the existence of highly efficient markets."

"An economic shock that raises general market interest rates will be associated with a decline in stock prices, which will lower realized returns. "

There´s more.

http://site.iugaza.edu.ps/wdaya/files/20...Street.pdf

I never read this book. Just googled it and made search for interest rates. Was keen to know who could argue interest rates don´t affect stock prices. It´s somehow true true interest rates don´t affect stock prices directly. Interest rates affect the law of demand. And the law of demand will consequently affect stock prices.

You know why beach hotels are cheaper in winter? Or why umbrellas can´t be sold in summer? Law of demand. Interest rates makes the demand more expensive. And reduces the demand. Making general prices lower. You don´t need to have a PHD to know this simple fact of life.

If I want to sell a house and have 15 buyers maybe I will raise the price of the house. They will probably pay more. If there´s no buyer will have to lower the price. Buyers if interest rate goes up can´t buy the house. Because the effort to pay the monthly installment will be bigger. So your price cannot reach you buyer because the rate increase ate the space where your price and the buyer could connect. Everytime there´s a rate increase you are eating a chunk of an asset price. And because credit is transversal to all economy you take from the entire economy.
A recession is an economy without credit.

All prices are subject to interest rates. Also QE, fractional and all others. But interest rates can make the tide go up and down. (buffett)

Conspirational I would say it´s a way of calling back home the dollars from the world. Harvesting and fuck.. up China.

Back to topic. Trump saying BUY THE DIP!

Kaching... DOW NAZ and S&P Bungee Snapback!

Was never too huge a fan of "A random walk down wall street". For one thing, anybody who followed it during Bitcoin lost their shirt...

That said, the random walk hypothesis is a bridge too far for me. Markets aren't random, they're just the product of a LOT of inputs, and it's very difficult to separate signal from noise, even in hindsight.
The book's central point, which is that as an amateur you're better off playing with index funds and long-term Dollar Cost Averaging than trying to do a bunch of research to "beat the market" is a very sound one, and it's good advice. But lots of people saw the 2008 crash coming, and lots of people saw this one coming, too. Hell, I did. I noticed in Jan that a lot of money was going into the FAANG stocks not because there was a lot of growth potential there, but simply because people needed to stash their cash somewhere and the FAANGs had delivered good returns in the past. Noticing that saved me a lot of cash I would've lost if I'd blindly DCA'd into a vanguard fund.

Random Walk Down Wall Street is very right though, when it says that if you overreact to every drop and try to micromanage your funds you're going to lose a ton of cash.
Another thing I'll say is that people who try to construct narratives from charts (To use an example from this thread, something like "This drop is proof that the fed is out to get trump! They're going to send the economy to 2008 levels in order to help the deep state win!") tend to lose a LOT of money. I've done this before with BTC and always regretted it.

Another note I'll make is that I've never seen a significant inverse correlation between bitcoin price and the dow, so people who are hoping that a dow drop is likely to trigger sustained price rises in bitcoin are very likely to be disappointed. This recent price rise in bitcoin was triggered by reaching a critical support area and very likely might just be a dead cat bounce.

Quote: (12-26-2018 11:09 AM)Troller Wrote:  

Quote: (12-25-2018 08:58 PM)The Father Wrote:  

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

One of the best-ever books on the stock market is Burton G. Malkiel's "A Random Walk Down Wall Street," which has been re-printed in eleven editions since it first came out in 1973.

THANK YOU FOR POSTING THIS!! If there is anything this thread needs, its a well-researched bible of investing history to use as a lens through which to view the current volatility.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

In one chapter, he makes the point that the market always heads into a tailspin when interest rates are raised.

I have read this book several times, and such demonstrative claims ("when x happens, y always follows") strike me as the exact antithesis of Malkiel's research. Just to be sure, i pulled out my copy (2015 version) and looked for any language on interest rates, federal reserve actions - anything close to what you said.

Here is Malkiel's actual language on the topic of Federal Reserve hikes:

"The [1929] crash itself, in [Bierman's] view, was precipitated by the Federal Reserve Board' policy of raising interest rates to punish speculators".

That's all I saw, but feel free to quote the book directly is you saw something I missed.

Quote: (12-22-2018 04:58 AM)Days of Broken Arrows Wrote:  

The hard part will be finding where the bottom is and buying in then. We had a mini-pullback in Jan.-Feb. 2016, and I missed major buying opportunities. I'm gonna try to do better this time.

It's like you read this wonderful book, and didn't internalize any of it! The THEME of the book is: Capital markets are random. Don't jump in and out. Have a diversified portfolio of stocks and bonds and add to it consistently over time.

And that's the last thing I hope to say on this thread: All the nay-saying, know-nothing posts, conspiracy theory posts, etc - it's maddening.

Malkiel's book is indeed one of the best (some say the best) investment book ever written. Or read "The Intelligent Investor" by Benjamin Graham (Warren Buffet's mentor). Or pretty much anything written by Buffet. They all say what most of you (the smart ones) know intuitively: Timing the market is a sucker's bet, for gambling addicts. Invest over the long term, and DIVERSIFY: Stock index funds, bond index funds, etc. Don't over-invest in any one stock, or sector, and don't jump in and out of the market.

"The case for tightening credit before a major rise in the general inflation rate rather than afterward is that the longer the delay, the greater the eventual pain is likely to be in terms of lost economic output and rising unemployment. And so the central bank restricted credit and engineered a rise in interest rates. The hope was that further rises in property prices would be choked off and the stock market might be eased downward.
Interest rates, which had already been going up during 1989, rose sharply in 1990. The stock market was not eased down: Instead, it collapsed. "

"Again in 1987, interest rates rose substantially, preceding the great stock market crash of October 19. "

"On the other hand, when interest rates are very low, fixed-interest securities provide very little competition for the stock market and stock prices tend to be relatively high. During the 1990s, when bank rates on certificates of
deposit fell to 4 percent or less and long-term rates on U.S. Treasury securities fell to less than 6 percent, money poured out of the banks and the bond markets and into the stock market. This pushed up stock prices and, thus, provided justification for the last rule of the firm-foundation theory:
Rule 4: A rational investor should be willing to pay a higher price for a share, other things being equal, the lower are interest rates."

"Higher risk and higher interest rates tend to pull them down. There is a logic to the stock market, just as the firm foundationists assert."

"Changes in interest rates also systematically affect the returns from individual stocks and are important nondiversifiable risk elements. To the extent that stocks tend to suffer as interest rates go up, equities are a risky investment, and those stocks that are particularly vulnerable to increases in the general level of interest rates are especially risky".

"will be sensitive to the tendency of certain stocks to be particularly affected by changes in interest rates."

"First, an increase in the rate of inflation tends to "increase interest rates and thus tends to lower the prices of some equities, as just discussed."

"The volatility of interest rates constitutes a prime economic influence on share
prices".

"Specifically, when interest rates go up, share prices should fall, other things being the same, so as to provide larger expected stock returns in the future. Only if this happens will stocks be competitive with higher-yielding bonds. Similarly, when interest rates fall, stocks should tend to rise, because they can promise a lower total return and still becompetitive with lower-yielding bond"

"Obviously, in any given period there are many influences on stock prices apart from interest rates, so one should not expect to find a perfect correspondence between movements of interest rates and stock prices. Nevertheless, the tendency of interest rates to influence stock prices could account for the sorts of return reversals that have been found historically, and such a relationship is perfectly consistent with
the existence of highly efficient markets."

"An economic shock that raises general market interest rates will be associated with a decline in stock prices, which will lower realized returns. "

There´s more.

http://site.iugaza.edu.ps/wdaya/files/20...Street.pdf

I never read this book. Just googled it and made search for interest rates. Was keen to know who could argue interest rates don´t affect stock prices. It´s somehow true true interest rates don´t affect stock prices directly. Interest rates affect the law of demand. And the law of demand will consequently affect stock prices.

You know why beach hotels are cheaper in winter? Or why umbrellas can´t be sold in summer? Law of demand. Interest rates makes the demand more expensive. And reduces the demand. Making general prices lower. You don´t need to have a PHD to know this simple fact of life.

If I want to sell a house and have 15 buyers maybe I will raise the price of the house. They will probably pay more. If there´s no buyer will have to lower the price. Buyers if interest rate goes up can´t buy the house. Because the effort to pay the monthly installment will be bigger. So your price cannot reach you buyer because the rate increase ate the space where your price and the buyer could connect. Everytime there´s a rate increase you are eating a chunk of an asset price. And because credit is transversal to all economy you take from the entire economy.
A recession is an economy without credit.

All prices are subject to interest rates. Also QE, fractional and all others. But interest rates can make the tide go up and down. (buffett)

Conspirational I would say it´s a way of calling back home the dollars from the world. Harvesting and fuck.. up China.

Back to topic. Trump saying BUY THE DIP!

You've quoted the 1999 version. Your own link says so. Over the years, the author has removed the references you cite. Not sure why, but obviously he no longer felt they merited being in the book. In any event, one citation you make says interest rate hikes "tend to" reduce stock prices - no one would argue with that, and anyone who's done basic math understands that if you increase a discount rate applied to future cash flows, all else equal, you get a lower PV. But what i did (and still do) object to was using this masterpiece of investment advice - who's central theme is "we don't know what will happen next, so never time the market" to imply the opposite, by (falsely) asserting that it said, and i quote,"the market always heads into a tailspin when interest rates are raised." That's the actual quote the OP said. I object to it because it implies that, if there are fixed rules, one can game them. To repeat, the central theme of the book (which i encourage you to read) is: Market timers always lose. Buy-and-hold investing in a diversified portfolio is the empirically-proven highest return. But please - by all means, treat the markets like a casino. Over 85% of stock market buying and selling is algorithmic trading by institutional investors. The only way to make any real money exploiting stupidity would be with inexperienced or stupid retail investors. I.e., i will personally do better if you ignore the author's advice.

Quote: (12-26-2018 05:36 PM)SamuelBRoberts Wrote:  

Was never too huge a fan of "A random walk down wall street". For one thing, anybody who followed it during Bitcoin lost their shirt...

Not sure I follow. Anyone who followed the book invested no more than maybe 5-10% of their portfolio in crypto, an unproven asset class at best, and one with a small sample size of historical returns.

Why do you think anyone who followed Malkiel lost their shirt on shitcoin?

Quote: (12-26-2018 08:08 PM)The Father Wrote:  

Why do you think anyone who followed Malkiel lost their shirt on shitcoin?

Wasn't anybody who followed Malkiel, just those in the bitcoin sphere who did.
They failed to pull out when things turned sour, because pulling out meant trying to "time the market". The smart money pulled out with huge returns while the guys who continually DCA'd in even during the nasty bear market just got destroyed. How much of their portfolio they put into crypto I don't know, but I did know some people like that and they did get hurt very badly. In some cases they saw 3-4 digit percentage returns turn into losses because they were too slow to pull the trigger on selling. Pretty sad sight.