Investment Thread - For all your money needs

[DeacsATS]

I worry about inflation here, too... It has been punk for so long that I think people forget how much damage it can do.

The Fed is clearly and openly not worried about it right now... Employment is their focus and they are willing to let inflation run a little hotter. The meeting next week will be interesting because I am sure Powell will get questions on it. Commentary from Biden & Yellen has me convinced rates are going much higher this year. While we are still near historically low levels, I still think a large percentage move in the 10-year would have a number of negative consequences.

I wrote this in January 2021 (page 47 of this thread). And I'm not smart or a unique thinker. So to say that this was unexpected and came out of nowhere is a complete fallacy.

The Fed encouraged it, then said it was transitory, and now they are pretty much fucked.

 

[Liquid Karma]

I just know that my Roth has lost about a fifth of its total worth in one week. Doesn't really matter because I won't need it for like 15 years but it's still interesting to watch.

Way worse happened in 2008 and we then had an incredibly long sustained run. Every dollar you put in now is buying up assets at a discount. You're still great long term.

 

[DeacsATS]

Way worse happened in 2008 and we then had an incredibly long sustained run. Every dollar you put in now is buying up assets at a discount. You're still great long term.

Mostly agree. But how do you know you are buying anything at a discount right now? A discount to what?

I'm still waiting. Sitting on a lot of cash (which sucks in an inflationary environment).

 

[Liquid Karma]

Mostly agree. But how do you know you are buying anything at a discount right now? A discount to what?

I'm still waiting. Sitting on a lot of cash (which sucks in an inflationary environment).

Fair point.

Only live plays I have right now are the SPY puts I mentioned earlier. I'm not even bothering to look at my 401k.

 

[PhDeac]

Today, specifically, is kind of dumb.

Last month the CPI was 8.5% y/y... The worst in ~40 years.
This month, the expectations were for it to "cool" a bit to 8.1% y/y... Instead, it only "cooled" to 8.3%.

So lower, but not as much lower as expected... And there were many thinking it would have a 7 handle.

In reality, we're talking tenths of a percent on what is largely a flawed measurement anyway.... But the headline number was worse than expected (even though you could make the argument that inflation has peaked). So stocks are weak (again).

At some point, we need to respond to the facts and realize economists are often full of shit rather than pitch a fit when the facts don’t line up with expectations. It’s a shitty way to run the economic side of a society.

 

[ImTheCaptain]

yes but who makes the facts

 

[DeacsATS]

At some point, we need to respond to the facts and realize economists are often full of shit rather than pitch a fit when the facts don’t line up with expectations. It’s a shitty way to run the economic side of a society.

I don't understand what this means.

Aren't the price movements of any market dependent upon the expectations of the market participants?

How would anyone know the facts ahead of time?

 

[06deacon]

Mostly agree. But how do you know you are buying anything at a discount right now? A discount to what?

I'm still waiting. Sitting on a lot of cash (which sucks in an inflationary environment).

I guess you don’t really ever know but it’s probably fair to assume it’s a discount compared to where the price would be at age 60 or 70 when you sell to fund your retirement. Just depends on your horizon and what you’re trying to accomplish with a specific purchase or sale.

 

[Shooshmoo]

I'm still waiting. Sitting on a lot of cash (which sucks in an inflationary environment).

Also sitting on lots of cash -- need one of you guys who knows what he is talking about to tell me when and where to put it so I can retire in 15-17 years.

 

[Donkey Deac Doug]

Depression is all but confirmed, bros. Fed is going to knee jerk interest rates over 12-18 months, and then it's just a runaway deflationary economy.

It's because of what ATS said, you can rely on people to mountain-molehill fuzzy statistics to their detriment.

 

[PhDeac]

I don't understand what this means.

Aren't the price movements of any market dependent upon the expectations of the market participants?

How would anyone know the facts ahead of time?

People knew the CPI this morning and like you said, they reacted to the CPI vs. expectations instead of the CPI itself.

 

[birdman]

I don't understand what this means.

Aren't the price movements of any market dependent upon the expectations of the market participants?

How would anyone know the facts ahead of time?

I'm not a financial analysist, but I work in predictive modeling for complex systems. If a 0.2 difference between a prediction and an outcome causes a big sell off or some big sudden market movements, we are putting too much confidence in our predictive models. I'd argue that economists don't effectively account for uncertainty in predictions and further stock and assets traders often discount the uncertainty that is accounted for. What kind of stats and predictive modeling do they teach in business schools and econ programs?

 

[plama]

told y'all you should be like 40% allocated to pinball machines

 

[Donkey Deac Doug]

I'm not a financial analysist, but I work in predictive modeling for complex systems. If a 0.2 difference between a prediction and an outcome causes a big sell off or some big sudden market movements, we are putting too much confidence in our predictive models. I'd argue that economists don't effectively account for uncertainty in predictions and further stock and assets traders often discount the uncertainty that is accounted for. What kind of stats and predictive modeling do they teach in business schools and econ programs?

This is really the problem. We've demonstrated that investors can't be calm, rational adults. Knee jerks for everyone.

 

[PhDeac]

I'm not a financial analysist, but I work in predictive modeling for complex systems. If a 0.2 difference between a prediction and an outcome causes a big sell off or some big sudden market movements, we are putting too much confidence in our predictive models. I'd argue that economists don't effectively account for uncertainty in predictions and further stock and assets traders often discount the uncertainty that is accounted for. What kind of stats and predictive modeling do they teach in business schools and econ programs?

The lack of confidence intervals in this discussion is troubling. My impression is that economists have become the go to social scientists not because they’re right but because they’re sure and then act like the facts are the problem when the facts don’t line up with their projections.

It’s kind of like how NFL draft experts will claim a QB will go top 10 and when he drops to the 3rd round, they’ll claim he was undervalued rather than say they’re wrong.

 

[DeacsATS]

I am really not sure how this became about economists and accuracy in predicting CPI. That feels a like a total misread of what is driving the stock market and the broader economy. Stocks have largely ignored the CPI today, aside from some growthier (tech) stocks that are taking it to mean that there is a higher chance of a 75bps raise in June (vs the already telegraphed 50bps).

Everybody knows inflation is high... Whether it is 8.3% or 8.1% y/y doesn't really matter when it was struggling to get to the 2% bogey for years.

I think the main thing is that people are looking for evidence that it has peaked... And I guess 8.3% vs. 8.5% last month proves that? I'm not so sure.

But as is the case with all economic data... Now that it is in the rear view, it is on to the next thing.

 

[PhDeac]

I was going off what you said.

Today, specifically, is kind of dumb.

Last month the CPI was 8.5% y/y... The worst in ~40 years.
This month, the expectations were for it to "cool" a bit to 8.1% y/y... Instead, it only "cooled" to 8.3%.

So lower, but not as much lower as expected... And there were many thinking it would have a 7 handle.

In reality, we're talking tenths of a percent on what is largely a flawed measurement anyway.... But the headline number was worse than expected (even though you could make the argument that inflation has peaked). So stocks are weak (again).

But I guess I need to remember...

Seems like a good time to remind everyone that I am a moron who knows nothing.

 

[DeacsATS]

Ha! That's fair.

TBH, I was impressed that the market ultimately shrugged off the CPI... It looked like we'd be down on the immediate release, but that was probably algo-driven.

But as LK mentioned yesterday... Folks were pretty bulled up on an opportunity for a bounce today on a good number. Which we didn't get.

 

[dartsndeacs]

Coinbase currently looking like the worst speculative buy I've ever made.

When the chart runs out of space that’s never a good sign

 

[plama]

Looks like a pretty good buy from there, I mean they got $6 billion in cash, so the rest is trading at like $4 billion.