…… Question On Stock Market
- Thread starter Terrwyn
- Start date
Okay, you need to stop thinking like a people … as in people are what affected the numbers once upon a time.
These days it is all machines and algorithms. People have emotions, machines and algorithms don’t.
That is very simplified but that is basically the difference between the way things used to be and how they are now.
These days it is all machines and algorithms. People have emotions, machines and algorithms don’t.
That is very simplified but that is basically the difference between the way things used to be and how they are now.
Agree with Kathy and I’ll add a bit of history: the markets make more sense when you think of them as political utilities. This has been true for decades but became more blatant around 2007/8. Everything is manipulated in ways that those who manage trillions of dollars want. It makes sense to them, for their purposes and the old rules no longer apply.
If Glass-Steagal had been reinstated and then let the chips fall wherever, we’d be over it by now and have a healthy market that acts a bit more rationally.
Instead the Fed caved in and enabled the money and power addictions of Wall Street and Washington DC, over and over, and here we are.
Made me sad to figure it out because I always liked the simplicity of purely capitalistic markets but those days are gone. Focus on small and local and you’ll fly under the radar of Big Business.
If Glass-Steagal had been reinstated and then let the chips fall wherever, we’d be over it by now and have a healthy market that acts a bit more rationally.
Instead the Fed caved in and enabled the money and power addictions of Wall Street and Washington DC, over and over, and here we are.
Made me sad to figure it out because I always liked the simplicity of purely capitalistic markets but those days are gone. Focus on small and local and you’ll fly under the radar of Big Business.
Mary Contrary
Inactive
I just hope it stays up a bit longer so I can get divorced and get the ex husbands 401k I'm due. Should be divorced in a month or so or less depending on how busy the court is.
just hold off a little while longer before it all crashes. I desperately need that 401k money after the divorce. Planning on taking half out.
Dobbin
Faithful Steed
This is the conundrum that the Biden Regime is facing as a result of all the deficit spending - one creates a situation where everyone is waiting for the NEXT bail out so they can get their stranded investment back in some manner or fashion out of the economy.
The expectation of bail-out creates a situation where the economy RELIES on bail-out.
It is a marketplace that inevitably will crash since it is IMPOSSIBLE to keep up the deficit pace.
Dobbin
The best they can do is slow the rate of inflation And it will be a while before that starts to show. So figure on it being with us.
Now, by throwing the county into the Big D, that could really slow it down. I have a feeling they want to avoid that. Be interesting to see if they do because the urge will be to deficit spend and that is what got us into this fix in the first place.
Now, by throwing the county into the Big D, that could really slow it down. I have a feeling they want to avoid that. Be interesting to see if they do because the urge will be to deficit spend and that is what got us into this fix in the first place.
Mary Contrary
Inactive
I've been told by an old fellow TB-er that the ptb keep artificially pumping up the market. Even if it doesn't crash for a long time and we get to spend some of our 401k money (becuz we take it out so we don't lose it more) ....we still lose cuz of inflation and whatever we buy or use a service we have to spend more money....so how are we ahead? We are not. It's a Catch 22.
Tundra Gypsy
Veteran Member
I just watched Bo Polny, and he is still talking about a stock market crash. So, get your money out from wherever it is as soon as possible. Buy food, buy God's money, silver and gold, and plant your garden.
Dobbin
Faithful Steed
This true.
Owner tells of inflation back in the 1970s. Then a bank saving account returned about 5 percent, inflation was chugging along at about 14 percent, and a house loan could be had for about 16 percent. Meanwhile the stock market was "underperforming" at about 8 percent, and people were moving their money from equity stocks to money market accounts which then were keeping pace with inflation.
As Owner says "better to at least keep pace with inflation than lose money remaining in equities." Equities classically had appreciated at minimum 2 percent above inflation.
Not so much now. Since then Owner says it's been a mixed bag - the markets (all kinds) tending to go through "booms" and "busts" and money wheeling from one market to another depending on if money could be made in it. Housing in the early-mid 1980s, then the stock market, then back into housing in the mid 2000s, then Trump and the stock market ramping up again after the financial doldrum of the Obama years.
Owner's financial adviser has been moving Owner's equities into bonds and more "secure" investments. This is smart money as one ages and approaches the time of life when one might WANT the money. Equities are nice in that when the markets are booming, equities grow at greater than inflation PLUS they pay dividends and interest. Equities are bad in inflationary times in that inflation will generally outpace equity appreciation. And a downright depression (can result from inflation) will eliminate dividends as companies struggle to survive. Conversely, bonds don't appreciate the same way as equities, but they pay dividends regular and often. A company literally has to go "belly up" to affect their bonds.
Right now Owner's investments are a mix of equities and bonds. The equities are generally good quality ("widow's & orphan stocks."), and the bonds are generally government municipal bonds. Owner bought quality when he bought, and his investment adviser has been quick to "buy well" and "sell well."
And while there has been a 12 percent drop in the markets since Biden took office - that is more than offset by the 70 percent run-up under Trump. It all levels out.
A "correction" to the market may occur: think 2008 when Owner lost 60 percent of his equity value. Owner at that time was more heavily invested in "growth" stock which might not even pay a dividend, but promised new or exciting prospects for the future - and until 2008 were appreciating at 45 percent PER YEAR. Owner lost his shirt. But it was only 18 months for the market to recover and Owner to start appreciating his investments again. This is the beauty of not selling into a losing market . Steven K Bannon's expression "You don't catch a falling knife."
It is generally thought that the PPT (Plunge Protection Team) has been intervening extensively in the markets since the 2008 downturn. Maybe intervening more than not. While not good now it can be a useful tool for a Trumpian recovery when (not if) it occurs.
Dobbin
Mary Contrary
Inactive
Wonder how long it would take for the market to gain again? I might have ten yrs of my life left so I don't want to wait ten years., But I can wait three yrs. If a republican gets in (PLEASE!!!) IN 2024 maybe the market will go up? Or will it be too late cuz the communists in charge have totally destroyed this country,?
Bridey Rose
Veteran Member
Just take your money out of the stock market and invest it in nice, safe U.S. I bonds instead. They're paying 9.62% per year now. You only have to hold them for a year before you can cash them in if you need the money. However, the annual limit is $10,000.
Fixed-rate annuities in A-rated insurance companies are also an option. Some 5-year fixed-rate annuities are paying 3%, which is what a conservative stock market portfolio has been paying.
I wouldn't touch the stock market with a 10-foot pole right now; it's cruisin' for a bruisin' in my opinion!
P.S.: If you're really bold, consider investing directly in oil or gas as commodities, or in oil or gas company stocks, which should do well even if the rest of the market doesn't. Just my 2 cents because I'm not a CFP!
Thankfully, I been out of stocks for many years. Just interested in what the heck is going on. Inflation, stagflation, deflation, depression on the way? Hyperinflation?
annieosage
Inactive
Dobbin
Faithful Steed
Bonds are a "share" of the company. You buy bonds because should the company go belly up, you get a "share" of what remains as the company is sold off.
Not accurate calling them "debt." They are for the companies (they "borrow" from you) but for you they're nearly as good as "assets." It's your "share" of the total assets.
Equity (stock) holders hold "equity" in the company. You loan money to the company and buy stock - but what you're buying is "possibility" of future return. Equity is a way for a company to "get capital" to tide over business operation, expand capitalization, invest in tooling, building, physical assets. But a return to you is not guaranteed. The company could go belly up and you'll get an annual statement with stock prices in CENTS.
Owner found this to be the case with Bank of Boston. He owned stock in the bank - but when BofB went under, the share price went from $42 to $0.42 overnight. So BofB effectively "died" but the class action suits, unclaimed bond notes kept a small value going for a while. I see today they have an "interim CEO" but that is all. He probably pays the light bill.
Bonds are generally considered "safer" investments than stocks. But bonds generally don't pay as high a rate of annual return as stock does when stock value is up. But bonds pay an only slightly less rate of return during recessionary times while stock share price will drop AND perhaps even suspend dividends/interest.
Best is to buy stock (equity) early in life when you won't necessarily "need" the money. As you age you transition into Bonds - perhaps totally into Bonds if you reach your retirement age at the same time the economy reaches a recession. Then you sit back and "clip coupons" - which (used) to be the first act of cashing in a bond for sale.
But you won't be alone. EVERYONE and their brother does the same thing at the same time trying (flipping from stocks to bonds) to protect their "nest egg." The stock market drops - but a bond market "rallies" during deflationary times.
And it is the Fed who kinds of calls the tune on a bond yield/re-issue/rally rate.
The critique has been the Fed has become "politicized" and didn't respond to inflation fast enough as this could call question to the Biden Regime.
Meanwhile stockholders are taking a bath since a swap to bonds APPEARS ill advised on the basis of return. Many delay the transfer.
It's all a game...but a very serious HUMAN game of keeping one's self "whole."
And Joe Biden and the Fed DON'T WANT TO HELP YOU. Inflation helps them since government bonds are paid back to you at values/rates set during non-inflationary times. Inflation means the actual "value" that government pays you back bonds is "less." Inflation HELPS government at your expense.
That is - in addition to the "hidden tax" that inflation represents for consumer ANYTHING.
Dobbin
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