U.S. Stock market "CORRECTION!!" Why am I not "too-skeered"

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surfstar

climber
Santa Barbara, CA
Jan 2, 2019 - 09:45pm PT
Ricky D - that's why you need to adjust your asset allocation as you near retirement. Less stocks, more bonds / fixed income.

Read bogleheads. Google sequence of returns risk. You shouldn't have risky investments if you need the money soon (unless you have plenty and can withstand loosing 50% at any time)
Reilly

Mountain climber
The Other Monrovia- CA
Jan 2, 2019 - 09:54pm PT
John, Iím happy for you. I just hope you did better than 6%.
I did better than that on bonds in some of those years.
i'm gumby dammit

Sport climber
da ow
Jan 3, 2019 - 12:51am PT
Given what a pile of money would earn outside of the market in a bank, or, a sock or tucked in a mattress
There are other options. You could invest in a friends business. You could invest locally. Etc.

I think the anti-stock market sentiment is touching on the mutual exclusivity between maximizing shareholder wealth and the common good. And I don't think she is wrong in the aggregate. You can seek out companies that do take care of their employees, the earth, and things you care about and reward those efforts by investing there.

Happiegrrrl2

Trad climber
Jan 3, 2019 - 06:57am PT
I agree that Ricky D should move that money. I'd suggest making it a priority, like this week.

Keep some in *the game,* to keep Reilly from gloating ;) of course, and for just in case we actually aren't in WWIII. I don't like being a Chicken Littleb but something definitely IS coming down.
Reilly

Mountain climber
The Other Monrovia- CA
Jan 3, 2019 - 07:23am PT
You can seek out companies that do take care of their employees, the earth, and things you care about

Thatís why Iím heavily invested in Church & Dwight Co.
Iíll save you the effort- they make Trojans.
steve s

Trad climber
eldo
Jan 3, 2019 - 08:03am PT
I admire those of you who have the mental fortitude to invest in the stock market.
For myself I am intimidated by the complexities of that endeavor. My wife and I chose to invest in real estate in a certain area. The portfolio is doing quite well.
Carry on.
Toker Villain

Big Wall climber
Toquerville, Utah
Jan 4, 2019 - 08:49am PT
Fricken Powell bump.
Fritz

Social climber
Choss Creek, ID
Topic Author's Reply - Jan 4, 2019 - 08:55am PT
Fear, just a little, not a lot!

President Trump today blamed Democrat control of the house for why the stock market plummeted in Dec.

Another note is: Federal Reserve chairman Powell, who Trump appointed & now hates, announced today he will not give up his job if Trump tries to fire him. At the moment the S&P 500 index is up 2.8% today, so it appears key investors like that news.

Per the below graph & article, the best S&P 500 index gains have come with a divided U.S. Congress, or when Democrats were in control.


Source: Bank of America Merrill Lynch

The best stock market returns occur when Washington, D.C., is locked in the "gridlock" that comes with different parties controlling the two houses of Congress, data shows.

The best S&P 500 returns under a Republican president occurred while Congress was split, with that scenario producing 12 percent annual returns, according to data from Bank of America Merrill Lynch.
https://www.cnbc.com/2018/11/05/market-history-shows-investors-should-hope-for-gridlock-on-election-day.html
briham89

Big Wall climber
santa cruz, ca
Jan 4, 2019 - 09:08am PT
"To Help Put Recent Economic & Market Moves in Perspective" by Ray Dalio

https://www.linkedin.com/pulse/help-put-recent-economic-market-moves-perspective-ray-dalio?trk=portfolio_article-card_title

Worth a read
Reilly

Mountain climber
The Other Monrovia- CA
Jan 4, 2019 - 09:20am PT
Briham, just scanned that, looks pretty good. Will give it a longer look. The corporate debt
situation is the most worrisome tangible concern. Unfortunately, less tangible developments
are more likely, and less foreseeable, to cause an upset.
briham89

Big Wall climber
santa cruz, ca
Jan 4, 2019 - 02:32pm PT
just scanned that, looks pretty good. Will give it a longer look

That's pretty much Dalio reading in a nutshell for me. I have to read it 2 - 3 times to really comprehend everything that is there.
Reilly

Mountain climber
The Other Monrovia- CA
Jan 4, 2019 - 05:16pm PT
dalio said:
ďAdditionally, the US corporate tax cuts boosted equity prices even more and increased the budget deficit, which will require the Treasury to borrow much more. Ē

Uh, how does that boost the budget deficit? He lost some street cred there.
briham89

Big Wall climber
santa cruz, ca
Jan 4, 2019 - 06:11pm PT
How does cutting taxes not increase the deficit?
Reilly

Mountain climber
The Other Monrovia- CA
Jan 4, 2019 - 06:20pm PT
Well, I grant you that. I mainly took issue with him saying corporate tax cuts boost equity valuations. Thatís not a given and it certainly doesnít require the Treasury to borrow more.
The gubmint could reign in spending, unlikely as that may be. 😎
blahblah

Gym climber
Boulder
Jan 4, 2019 - 09:36pm PT
How does cutting taxes not increase the deficit?

It's not always obvious what effect cutting taxes has on the deficit; as a theoretical matter, it's clear that at some point raising the tax rate would decrease tax revenue. This is easiest to see at the limit: if the tax rate were 100%, no one would work, and the gov would collect essentially zero. So cutting taxes from the a very high rate likely would decrease the deficit.
This is the famous (or infamous) Laffer curve.

But most economists believe that taxes are currently below the rate that would raise the most revenue, and so would believe that under current conditions, cutting taxes would increase the deficit. I'm just pointing this out because the lib dream of taxing the rich as much as possible becomes self defeating, at some point, unless the real goal is just to punish rich people rather than raise revenue.
i'm gumby dammit

Sport climber
da ow
Jan 4, 2019 - 11:56pm PT
Well, I grant you that. I mainly took issue with him saying corporate tax cuts boost equity valuations. Thatís not a given and it certainly doesnít require the Treasury to borrow more.
The gubmint could reign in spending, unlikely as that may be. 😎
There is no doubt the tax cuts boosted equity valuations. Even if simply through the record breaking share buyback programs of 2018. They are the poster child for boosting equity valuations since they reduce outstanding shares raising earnings per share which as you know is a major factor in stock valuation.

https://www.cnbc.com/2018/07/02/corporate-buybacks-are-the-only-thing-keeping-the-stock-market-afloat.html
ms55401

Trad climber
minneapolis, mn
Jan 5, 2019 - 09:34am PT
anyone know how or where to buy sovereign bonds? in particular Argentina's 100-year bond?

there must be a secondary market for this
Reilly

Mountain climber
The Other Monrovia- CA
Jan 7, 2019 - 10:26am PT
Moosie, give you joy of yer winnings. As you know I only invest in entities that can be
rationally priced or which have no CC (Crankloon Coefficient).

2019 is starting out well. Looks like I wonít have to stoop to flying business this year.
Toker Villain

Big Wall climber
Toquerville, Utah
Jan 10, 2019 - 12:14pm PT
Yeah, a good start.

Oil will drive up everything (and it'll hammer the airlines), and certain sectors of retail are moribund, but the near future looks good especially healthcare, transport, and financials.

I liked Powell a lot more today than the day he hiked.
briham89

Big Wall climber
santa cruz, ca
Jan 10, 2019 - 02:23pm PT
Anybody investing in pot stocks? With Canadian legalization and more US states legalizing it, seems like an interesting growth play (no pun intended).
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