Stock Market- Investing

[dawg80]

Buffet and Munger need to stick to what they do best, long term investing, and stop all the silly rhetoric bashing anything and everything they personally don't like. Munger's attack on trading platforms like Robinhood is uncalled for. I don't use any of the phone app platforms like Robinhood, Webull, M1, etc...but many folks do and it still comes down to individual decision-making by investors. Criticizing such platforms is like criticizing cars just because there are stupid drivers out there. There are very good drivers too and those who use a car for good purposes. Munger called Bitcoin "stupid and evil." Evil? I briefly held a crypto but don't presently and have no plans to do so, but some people see crypto as another investment vehicle. We shall see.

Not to be mean but it bears pointing out that neither one of them should be focusing on "long term" investing or anything else, for that matter. They should both officially retire and go fishing or something.

Meanwhile the market continues its volatile way, not based on fundamentals really. Well, at least there are a lot of individual stocks (companies) which are fundamentally sound and have a promising future whose stock price has been beaten down recently, for no apparent reason. It's the market-makers and those banks of computers with programmed algorithms that drive the market crazy. I am not one to advocate for guv-mint intervention, BUT! maybe the SEC (and Congress if warranted) should establish some tighter parameters for these large organizations. Saw an interview with a senior analyst from Blackrock and he said the dependency on the computers has gotten out of control. Need more human oversight, some common sense to curtail the wild swings in the market. Then he was asked doesn't Blackrock use such computers too and he said, yes, of course! we have to to keep up and protect our clients' assets. This admission, this reality-check...everyone else is doing it so we have to as well....is why only guv-mint involvement will fix the problem. It's like referees in a sport, an "unbiased, neutral third party" to maintain a fair, level playing field. (yes, I know, some refs are notoriously biased).

Here's the bottom line, while entities like Blackrock control $billions in investment assets they still hold only a relatively small slice of the much bigger pie, BUT! they control what the whole pie does. Retail investors and even entities like pension funds get slaughtered through no fault of their own.

**latest figures, Blackrock controls $10 trillion in assets (in USD)

[dawg80]

I don't know if I should feel sorry for the goofy APES still touting AMC because they are fooled into believing it (trading at 14.99 presently) will "go to the moon" or because they are just plain stupid. I held AMC from March to June last year and made an absolute killing! But I knew it was a short-term, get in/get out opportunity and have posted periodically to sell and move on, only to get viciously attacked as a "shorty" and an "evil shill." I find it impossible to believe those posters really believe AMC is going to $100+ (some think $1,000!). CEO Adam Aron took $21 million of AMC's cash reserve and invested in a junior gold miner. Say what!? Right, AMC won't need that money to try to save their theater business...

Retail investors like these give the rest of us a bad name.

[Guisslapp]

Buffet and Munger need to stick to what they do best, long term investing, and stop all the silly rhetoric bashing anything and everything they personally don't like. Munger's attack on trading platforms like Robinhood is uncalled for. I don't use any of the phone app platforms like Robinhood, Webull, M1, etc...but many folks do and it still comes down to individual decision-making by investors. Criticizing such platforms is like criticizing cars just because there are stupid drivers out there. There are very good drivers too and those who use a car for good purposes. Munger called Bitcoin "stupid and evil." Evil? I briefly held a crypto but don't presently and have no plans to do so, but some people see crypto as another investment vehicle. We shall see.

Not to be mean but it bears pointing out that neither one of them should be focusing on "long term" investing or anything else, for that matter. They should both officially retire and go fishing or something.

Meanwhile the market continues its volatile way, not based on fundamentals really. Well, at least there are a lot of individual stocks (companies) which are fundamentally sound and have a promising future whose stock price has been beaten down recently, for no apparent reason. It's the market-makers and those banks of computers with programmed algorithms that drive the market crazy. I am not one to advocate for guv-mint intervention, BUT! maybe the SEC (and Congress if warranted) should establish some tighter parameters for these large organizations. Saw an interview with a senior analyst from Blackrock and he said the dependency on the computers has gotten out of control. Need more human oversight, some common sense to curtail the wild swings in the market. Then he was asked doesn't Blackrock use such computers too and he said, yes, of course! we have to to keep up and protect our clients' assets. This admission, this reality-check...everyone else is doing it so we have to as well....is why only guv-mint involvement will fix the problem. It's like referees in a sport, an "unbiased, neutral third party" to maintain a fair, level playing field. (yes, I know, some refs are notoriously biased).

Here's the bottom line, while entities like Blackrock control $billions in investment assets they still hold only a relatively small slice of the much bigger pie, BUT! they control what the whole pie does. Retail investors and even entities like pension funds get slaughtered through no fault of their own.

**latest figures, Blackrock controls $10 trillion in assets (in USD)

It isn’t Blackrock. It is the Fed. The Fed giveth and they taketh away. Don’t fight them.

[dawg80]

It isn’t Blackrock. It is the Fed. The Fed giveth and they taketh away. Don’t fight them.

It IS Blackrock and their own analyst said as much. It's them and others like them, the big firms that can drive the market by their volume of trades, up/down. Banks of computers programmed to trigger buys/sells with some arbitrary preset price. That moves the price on individual stocks and causes others, like panicky retail investors, to overreact and drive the price further, which in turn often causes a general "panic."

The Fed plays a role but is just one of the factors that drives the market. If not for the auto-set computers news from the Fed would have some short-term effect but then be absorbed fairly quickly and the market would return to the fundamentals and move on. Not so now.

[Guisslapp]

It IS Blackrock and their own analyst said as much. It's them and others like them, the big firms that can drive the market by their volume of trades, up/down. Banks of computers programmed to trigger buys/sells with some arbitrary preset price. That moves the price on individual stocks and causes others, like panicky retail investors, to overreact and drive the price further, which in turn often causes a general "panic."

The Fed plays a role but is just one of the factors that drives the market. If not for the auto-set computers news from the Fed would have some short-term effect but then be absorbed fairly quickly and the market would return to the fundamentals and move on. Not so now.

Fed is the big force. It drives liquidity and the rates of the largest market, bonds, which compete with stocks for fund flows. Blackrock can cause stocks to move, but the Fed causes the whole market to move.

[Guisslapp]

Fed is the big force. It drives liquidity and the rates of the largest market, bonds, which compete with stocks for fund flows. Blackrock can cause stocks to move, but the Fed causes the whole market to move.

https://twitter.com/timmerfidelity/s...118030849?s=21

Although this doesn’t show market indexes correlated to the long bond, the inverse correlation is well known and you can match it up and see for yourself that falling rates supported market rallies and raising rates caused pullbacks. The 2018 20% drawdown occurred when the Fed was tightening, remember?

A more important question is raised in the tweet, do we mean revert from here and keep the secular trend of lower rates intact or might this be the start of a new secular trend. The implications of the latter would be very profound for both stocks and bonds.

The markets are facing new dynamics that threaten the Fed’s ability to stay on the low rate trend, IMO. Inflation is the biggest threat. Decreasing rates require deflationary tailwinds - globalization, technology innovation, and immigration (expanding workforce). Decarbonization is also a headwind. If peak globalization and peak immigration are in the rear view mirror, it will be interesting to see if a new secular rate hiking trend continues (Fed consistently fighting inflation without having to worry about the employment side of the equation so much). If so, that is not necessarily good news for people that broadly own stocks and bonds. The continuation of the multi-decade secular bull run could be in jeopardy.

Of course, when I (and everyone) get this negative, that historically a sign of a bottom.

[dawg80]

Fed is the big force. It drives liquidity and the rates of the largest market, bonds, which compete with stocks for fund flows. Blackrock can cause stocks to move, but the Fed causes the whole market to move.

Blackrock is the largest but it's not the only market-maker. Collectively they can, and do, drive the market. Heck, Citadel plays all sides of the matter, they have clients they invest for and they are the vehicle other investment firms use to transact trades. That's like being one team on the field and the zebras too.

[Guisslapp]

Blackrock is the largest but it's not the only market-make. Collectively they can, and do, drive the market. Heck, Citadel plays all sides of the matter, they have clients they invest for and they are the vehicle other investment firms use to transact trades. That's like being one team on the field and the zebras too.

Blackrock isn’t the cause of the current pullback. Neither is Citadel.

[dawg80]

Blackrock isn’t the cause of the current pullback. Neither is Citadel.

Not "the cause" of the bear market, but a driver of it. The computers all pre-set to dump stocks at arbitrary prices (stop losses) causes the market to over-react to outside issues. Again, the fellow from Blackrock spelled it out, gave specific examples, and said such banks of computers exaggerate market movements, in both directions. This is what affects retail investors the most, the greatest impact. Now that I re-read your post #335 I think we are essentially saying the same thing.

[ChuckK3]

Bottom line: I'm going to have to work until I drop dead.

[Guisslapp]

Not "the cause" of the bear market, but a driver of it. The computers all pre-set to dump stocks at arbitrary prices (stop losses) causes the market to over-react to outside issues. Again, the fellow from Blackrock spelled it out, gave specific examples, and said such banks of computers exaggerate market movements, in both directions. This is what affects retail investors the most, the greatest impact. Now that I re-read your post #335 I think we are essentially saying the same thing.

Those are all short term moves. The direction the market goes over a day or two doesn’t really matter unless you are trading on margin. The Fed controls the current of the market.

Relatedly, the Fed’s announcement today was as expected but not as bad as feared. The 10 year yield started to check back and we are getting a post-Fed afternoon rally.

[Guisslapp]

I don’t know if you looked at the tweet I posted, but that is the most important driver of stock and bond performance right now.

[dawg80]

I don’t know if you looked at the tweet I posted, but that is the most important driver of stock and bond performance right now.

Elon will be banning you from Twitter, better enjoy it now...

[dawg80]

Red day in the market. 41 of my 44 holdings are down today. Not a big deal as it's all on paper, and I look for opportunities to nibble in the dips. But! the bigger question is, where is the bottom? I don't think we're there or even relatively close to a bottom, yet. We have a frickin' clown show in the White House and presently out-of-control in DC, so the economy has more hurdles to clear, thrown in front of it by the stupid democraps.

I am not one to lay all the blame on whoever is POTUS, because stuff happens, sometimes not the fault of the WH and/or Congress. But!! when you have idiots up there, they either don't do anything to fix things, because they simply don't know how or are purposely engaged in polices that are harmful to the economy (for political agenda reasons). So, in this case, while some of this is not the doing of Biden, he is clueless (and/or doesn't care) how to address the problems. Therefore, the market will be the scoreboard of said harmful policies. For months the numbers (polls) have been screaming a warning about the lack of confidence among consumers and business leaders. We are lurching toward a recession when in truth, the US economy should be poised to explode to the good.

Going back some 70 years the economy has performed the best under these three presidents, in order: 1) Bill Clinton, 2) Ronald Reagan, 3) Donald Trump. And the three worst have been: 1) Jimmy Carter, 2) Joe Biden 3) obummer (slow, anemic growth). Biden cannot/will not rescue the economy.

Now, if the GOP crushes it in the mid-terms and grabs a large enough working margin in Congress can they turn it around starting January, 2023? I suppose it is possible, but unfortunately The Swamp swallows everyone and even well-intentioned lawmakers get overwhelmed and some succumb to the "oh well, I tried, might as well profit personally" syndrome.

The good news is, no matter what, the market provides opportunities to make money. Just have to know how and pay attention.

[Guisslapp]

Red day in the market. 41 of my 44 holdings are down today. Not a big deal as it's all on paper, and I look for opportunities to nibble in the dips. But! the bigger question is, where is the bottom? I don't think we're there or even relatively close to a bottom, yet. We have a frickin' clown show in the White House and presently out-of-control in DC, so the economy has more hurdles to clear, thrown in front of it by the stupid democraps.

I am not one to lay all the blame on whoever is POTUS, because stuff happens, sometimes not the fault of the WH and/or Congress. But!! when you have idiots up there, they either don't do anything to fix things, because they simply don't know how or are purposely engaged in polices that are harmful to the economy (for political agenda reasons). So, in this case, while some of this is not the doing of Biden, he is clueless (and/or doesn't care) how to address the problems. Therefore, the market will be the scoreboard of said harmful policies. For months the numbers (polls) have been screaming a warning about the lack of confidence among consumers and business leaders. We are lurching toward a recession when in truth, the US economy should be poised to explode to the good.

Going back some 70 years the economy has performed the best under these three presidents, in order: 1) Bill Clinton, 2) Ronald Reagan, 3) Donald Trump. And the three worst have been: 1) Jimmy Carter, 2) Joe Biden 3) obummer (slow, anemic growth). Biden cannot/will not rescue the economy.

Now, if the GOP crushes it in the mid-terms and grabs a large enough working margin in Congress can they turn it around starting January, 2023? I suppose it is possible, but unfortunately The Swamp swallows everyone and even well-intentioned lawmakers get overwhelmed and some succumb to the "oh well, I tried, might as well profit personally" syndrome.

The good news is, no matter what, the market provides opportunities to make money. Just have to know how and pay attention.

The market returns under Obama were also higher than under Trump.

But mixing politics with investing is a surefire way to underperform the market.

Keep your eye on the 10-year Treasury yield. I am just glad my exposure to bonds is minimal.