Stock market tips and experiences

[dmatre]

Originally Posted by ASAP

do you think the average us consumer is doing well right now?

Prices up significantly over 5 years, minimal wage growth in the middle sector and unemployment slowly piling up? Again, I am not asking macro economic indicators that will drive wallstreet bonuses.

Judging by how crowded the planes & airports have been over the past weeks, I’d say the consumer isn’t hurting too badly.

[ASAP]

Originally Posted by dmatre

Judging by how crowded the planes & airports have been over the past weeks, I’d say the consumer isn’t hurting too badly.

Some good info here for you -

https://www.newyorkfed.org/medialibr...pdf?sc_lang=en

Namely take note of consumer CC debt and balances.

Also... airports have been crowded for years (outside of the few Covid years)... sadly I would argue that's an infrastructure issue that hasn't been catered to a growing population for at least 20 years.

[chassis]

The average consumer is doing well. Very well.

[DrVenture]

Originally Posted by ASAP

do you think the average us consumer is doing well right now?

Prices up significantly over 5 years, minimal wage growth in the middle sector and unemployment slowly piling up? Again, I am not asking macro economic indicators that will drive wallstreet bonuses.

Your question ignores my very cogent comments regarding interest rates. And qualifies as a straw man argument.

You appear to be implying that no consumers have exposure to "Wall Street"? I am a consumer and most certainly do. I am guessing that you do too. Unemployment has ticked up slightly from historic lows. 4.2% is hardly problematic.

I am not here to argue with anyone. Simply to post relevant information. Are you disputing something that I posted? If so, identify that with which you take issue (within context) and provide supporting data.

https://tradingeconomics.com/united-...il%20of%202020.

"Wages in the United States increased 6.30 percent in August of 2024 over the same month in the previous year. Wage Growth in the United States averaged 6.19 percent from 1960 until 2024". Average hourly wages rose .4% MoM in August.

[DrVenture]

Originally Posted by ASAP

Some good info here for you -

https://www.newyorkfed.org/medialibr...pdf?sc_lang=en

Namely take note of consumer CC debt and balances.

Also... airports have been crowded for years (outside of the few Covid years)... sadly I would argue that's an infrastructure issue that hasn't been catered to a growing population for at least 20 years.

Now drill down into the chart from the link that you posted. The largest increases in debt are from student loans and mortgage debt and auto loans, as well as CC debt. Education expenses have been outpacing other expenditures for years. And higher mortgages come from higher housing valuations. We all know (BMW forum) that people buy more car than they can generally afford. Perhaps a 20% drop in home prices would make everyone happier? I doubt it. Many would then complain about the loss of home equity.

What is your actual concern? Be specific. Are you struggling? Your family members? Or does this have something to do with politics or distaste for the FED? Most should be pretty happy with 6% wage growth, 3% GDP, a 75% drop in inflation, 4.2% unemployment and interest rates coming down.

[DrVenture]

Not to be a complete a-hole, but after driving economy cars, and keeping them 10-15 years, while investing and saving to put my kid through college (debt free) and pay off my home in 12 years, while funding my 401K to the max as a one-income "average" household, I have little sympathy for the "average consumer" who drove expensive cars and saddled their kids with education debt, while tapping their home equity.

I know a whole lot of people who made a whole lot more money than me and seem to not have a pot to piss in. I came to the conclusion years ago, that they couldn't be helped. In many cases, they wouldn't be helped. The common refrain being, "Don't tell me what to do". My response being, "Okay".

[ASAP]

Originally Posted by DrVenture

Now drill down into the chart from the link that you posted. The largest increases in debt are from student loans and mortgage debt and auto loans, as well as CC debt. Education expenses have been outpacing other expenditures for years. And higher mortgages come from higher housing valuations. We all know (BMW forum) that people buy more car than they can generally afford. Perhaps a 20% drop in home prices would make everyone happier? I doubt it. Many would then complain about the loss of home equity.

What is your actual concern? Be specific. Are you struggling? Your family members? Or does this have something to do with politics or distaste for the FED? Most should be pretty happy with 6% wage growth, 3% GDP, a 75% drop in inflation, 4.2% unemployment and interest rates coming down.

Most of my saltiness is with poor Govt / Fed policy as it relates to cost of living to an average middle class income consumer. Now - I will say this does not apply to me, my car is paid off, I have equity in my house and let's just say enough investments... however, I as opposed to most folks in this country like to think about others... as well as the younger generation coming into place. I would be ok with a 20% drop in equity in my house as long as affordability came back... are you OK and most of America ok with this? Don't think so... but more than likely thats because most of America overbought and here we are. Also, you keep showing wage growth... but you omit that it comes from the bottom of the wage pool.

[DrVenture]

My home is only a small fraction of my total net worth. So, I don't even think about it.

Caring about peoples wealth as it pertains to their well-being is a losing strategy. I choose to care about it just as much as they do - which appears to be little at all. So many lifelong friends share their info with me. I know what they do, how much they make and how they allocate it. All are typical middle-class and almost all are dual-income. Many average folks are doing just fine. Some struggle despite average expenses and $150-200K household incomes, in this medium-cost Midwest environment. The government is not the source of their problems with money. Their problems relate to planning and self-restraint and sound financial judgment. They tend to blame external forces. But cannot explain why people just like them are doing better.

Certainly the government did not force these people to "overbuy". As you say, "most of America overbought", maybe they need less sympathy and more tough love?

I am not "omitting" anything, nor am I focusing on a statistical slice that serves my narrative. I posted an average. I also believe it is good when the majority of wage growth occurs at the bottom of the wage spectrum. Those are the folks who will benefit most. I put my empathy where it may be most deserved. It is about time they get their due.

[DrVenture]

Government and FED policies are universal. They impact everyone in similar financial strata the exact same way.

As an example, I have a friend who constantly laments that he would be doing so much better, "if it weren't for the lousy public school system". I ask him, "Was there anyone, at all, in his same class and school and family situation who did really well?"
His answer is, "Sure, of course". I then ask, "Why not you, then?".

Similarly, government and FED policy affect all middle-class average families the same exact way. If some measurable percentage of them are doing very well, then the differences must be in the individuals choices and life decisions. But, no one wants to hear that they may be personally responsible for their own circumstances, particularly when those circumstances are not favorable. They will take full credit when the opposite is true, though.

Here is the rub: accepting that one is personally responsible (generally speaking) for their own outcome is the key to success. It is what enables an individual to take full control of their life. You cannot change what others will do. But, you can alter your own trajectory. Or at least that is how I choose to approach life and financial success.

[ASAP]

Originally Posted by DrVenture

Government and FED policies are universal. They impact everyone in similar financial strata the exact same way.

As an example, I have a friend who constantly laments that he would be doing so much better, "if it weren't for the lousy public school system". I ask him, "Was there anyone, at all, in his same class and school and family situation who did really well?"
His answer is, "Sure, of course". I then ask, "Why not you, then?".

Similarly, government and FED policy affect all middle-class average families the same exact way. If some measurable percentage of them are doing very well, then the differences must be in the individuals choices and life decisions. But, no one wants to hear that they may be personally responsible for their own circumstances, particularly when those circumstances are not favorable. They will take full credit when the opposite is true, though.

Here is the rub: accepting that one is personally responsible (generally speaking) for their own outcome is the key to success. It is what enables an individual to take full control of their life. You cannot change what others will do. But, you can alter your own trajectory. Or at least that is how I choose to approach life and financial success.

You have a very hands off approach to the economy which I too am a fan off... unfortunately, you should know that our economy doesn't work that way and in fact chooses winners and losers. The entire Zirp policy and post Covid policies were ones that massively benefited the wealthier groups and asset holders... it is what it is. However they also massively hurt a large group of our population(namely those on the lower end of the totem pole) ... post 2009 and bailouts, well similar stories again. If it was my choice, i would run the economy fully hands off...but that also means no bailouts or stimulus or tariffs (at least that would be a truly open and free market). And saying the right time or opportunity that is presented to people that doesn't matter is just simple false in every way imaginable... and govt policy dictates that massively.

So we go back to our original question here about the fed's recent actions. Why are we currently lowering interest rates and how is this to benefit the population of the US? The answer is it doesn't... the treasury yield was already priced in for mortgage rates and this is a free break to corporations, heavy balance sheets and to save banks and CRE which are on the crux of imploding if this doesn't happen. Similarly, it's to help refinance the interest on debt that the govt is currently paying... it's irrelevant that you say we have 2.2% inflation when the past 5 years had over 30% cumulative inflation... lowering interest rates doesn't resolve any of that nor will it... nor will it help folks buy homes who don't already have them (not without far more aggressive action that the govt will not undertake at this time). Why? because they have again chosen the winners here... which are the wealthy and asset holders... you can argue that as much as you want, but that is just reality. Corporations are doing everything they can right now to save on opex costs which means reducing salaries... the layoffs allow them to rehire at much lower rates which is actively happening... and don't talk about wage growth again for starbucks pourers.

[e92nin]

Anybody know any books that sums up the concept well?

[tom2021]

Since Mid 2021, SP 500 performs much better than Russel 2000.
Will Russel 2000 catch up?

[DrVenture]

Originally Posted by tom2021

Since Mid 2021, SP 500 performs much better than Russel 2000.
Will Russel 2000 catch up?

.

I used to always hold a decent amount in small cap funds, as they performed better than S&P and many other sectors. The "word" is that small caps perform better in an environment with rates coming down. Maybe they will outperform again.

I still have a small allocation to OTCFX. It underperformed nearly every other sector fund that I own in 2023 and YTD 2024. And for the past 10 years. I will likely sell the remainder soon, after retirement, when the cap gains will have less tax consequences. One advantage of holding small caps in a taxable account is little/no dividends on an annual basis.

Another way to get small cap exposure is through an extended market index fund.

[DrVenture]

Originally Posted by ASAP

...and don't talk about wage growth again for starbucks pourers.

That was you. I agreed and have no problem with it.

One can lament the cards they are dealt, or play them to win.

[ASAP]

Originally Posted by DrVenture

That was you. I agreed and have no problem with it.

One can lament the cards they are dealt, or play them to win.

i appreciate these paragraphs... except I am still asking the same question-

Why are we lowering interest rates right now? What is the rationale and how is it supposed to help the average consumer right now?

[XutvJet]

Originally Posted by ASAP

i appreciate these paragraphs... except I am still asking the same question-

Why are we lowering interest rates right now? What is the rationale and how is it supposed to help the average consumer right now?

"Help"? It won't. It will mostly help large business and the ultra wealthy.

More sub $200K/yr households are cash strapped now compared to a few years back. Lower interest rates will entice many to spend money they don't have. I say "many" because the vast majority in this country either don't make enough to save much and the higher income folks tend to live outside their means and don't save remotely enough to maintain that lifestyle. Those higher income earners, usually in their 30s and 40s, often say, "I love my job, I'll work until I'm 75 so I'm not worried about retirement!". Thing is, life changes and real sh!t happens, especially once you get into your 50s-60s.

I've worked hard, invested hard, played hard, and my wife and I have lived within our means while raising two great kids who have the same saving/investing mindset. My wife (49) and I (50) sleep damn good at night knowing our moderate home is paid off, cars are paid off, and that I could retire at anytime and we'd be completely fine.

[ASAP]

Originally Posted by XutvJet

"Help"? It won't. It will mostly help large business and the ultra wealthy.

More sub $200K/yr households are cash strapped now compared to a few years back. Lower interest rates will entice many to spend money they don't have. I say "many" because the vast majority in this country either don't make enough to save much and the higher income folks tend to live outside their means and don't save remotely enough to maintain that lifestyle. Those higher income earners, usually in their 30s and 40s, often say, "I love my job, I'll work until I'm 75 so I'm not worried about retirement!". Thing is, life changes and real sh!t happens, especially once you get into your 50s-60s.

I've worked hard, invested hard, played hard, and my wife and I have lived within our means while raising two great kids who have the same saving/investing mindset. My wife (49) and I (50) sleep damn good at night knowing our moderate home is paid off, cars are paid off, and that I could retire at anytime and we'd be completely fine.

Exactly... that's the point, I am trying to make... this is a ploy just to help asset owners again. It's going to be interesting to see if that Port strike unfolds and if consumer prices go up again.

[2000cs]

Originally Posted by ASAP

Exactly... that's the point, I am trying to make... this is a ploy just to help asset owners again. It's going to be interesting to see if that Port strike unfolds and if consumer prices go up again.

There’s more to it, of course. The theory is that lowering interest rates makes business borrowing more cost effective, so expansion projects get funded. That implies hiring and supports wages. Mortgage rates dropping should result in more home sales, especially for new homes, helping builders and building suppliers.

Can’t ignore the political optics of the rate cut coming 6 weeks before Election Day (as if it was just a day anymore). I know the FED is supposed to be independent of politics, but it isn’t.

Port strike is tomorrow; if it is lengthy shortages and inflation will result. The longer it goes, the less transitory inflation will be. Rates will then have to go back up, and the economy will stagnate. The strike is a huge risk.

The impact on GDP of Helene will also matter, likely tick growth down for Q3 and maybe Q4. Recovery will help some, but again with a port strike recovery will be more expensive, slower and dampen the overall economic outcomes.

[ASAP]

Originally Posted by 2000cs

There’s more to it, of course. The theory is that lowering interest rates makes business borrowing more cost effective, so expansion projects get funded. That implies hiring and supports wages. Mortgage rates dropping should result in more home sales, especially for new homes, helping builders and building suppliers.

Can’t ignore the political optics of the rate cut coming 6 weeks before Election Day (as if it was just a day anymore). I know the FED is supposed to be independent of politics, but it isn’t.

Port strike is tomorrow; if it is lengthy shortages and inflation will result. The longer it goes, the less transitory inflation will be. Rates will then have to go back up, and the economy will stagnate. The strike is a huge risk.

The impact on GDP of Helene will also matter, likely tick growth down for Q3 and maybe Q4. Recovery will help some, but again with a port strike recovery will be more expensive, slower and dampen the overall economic outcomes.

You are right in theory... but reality isn't shaking out that way. Mortgage rates have barely moved because the 10 year treasury was already priced in. Housing is at a stand still due to prices that are not manageable anymore and folks being locked in at massively lower rates than the going rate. Unemployment wont tick down because as another passionate poster mentioned, this is Covid excess... aside that, outsourcing and AI is picking up even more steam.

The port strike if it happens will bring about a lot of pain... i think before things really improve, we will get some stagnant growth, potentially inflation... which could then be followed by deflation to further reset things. I don't think employment will get better anytime soon, there are almost no companies posting solid results and wallstreet is tied strictly into tech firms it seems now which have some insane valuations... lowering the rates is simply an interim bandaid.

[other_evolved]

Originally Posted by ASAP

You are right in theory... but reality isn't shaking out that way. Mortgage rates have barely moved because the 10 year treasury was already priced in. Housing is at a stand still due to prices that are not manageable anymore and folks being locked in at massively lower rates than the going rate. Unemployment wont tick down because as another passionate poster mentioned, this is Covid excess... aside that, outsourcing and AI is picking up even more steam.

The port strike if it happens will bring about a lot of pain... i think before things really improve, we will get some stagnant growth, potentially inflation... which could then be followed by deflation to further reset things. I don't think employment will get better anytime soon, there are almost no companies posting solid results and wallstreet is tied strictly into tech firms it seems now which have some insane valuations... lowering the rates is simply an interim bandaid.

For Q2 S&P500 earnings, 400 of the 500 beat analyst expectations and earnings growth YoY was 11 or 12%. I'm not sure how that amounts to "almost no companies posting solid results".

[ASAP]

Originally Posted by other_evolved

For Q2 S&P500 earnings, 400 of the 500 beat analyst expectations and earnings growth YoY was 11 or 12%. I'm not sure how that amounts to "almost no companies posting solid results".

apologies, i should have been clearer... organic revenue growth

[dmatre]

Originally Posted by other_evolved

For Q2 S&P500 earnings, 400 of the 500 beat analyst expectations and earnings growth YoY was 11 or 12%. I'm not sure how that amounts to "almost no companies posting solid results".

Almost no companies… other than those 4 out of 5?