Stock market tips and experiences

[DrVenture]

This seems to be a good time to summarize the FEDs function. "The Fed's modern statutory mandate, as described in the 1977 amendment to the Federal Reserve Act, is to promote maximum employment and stable prices. These goals are commonly referred to as the dual mandate."

They are not tasked with helping people with poor financial literacy to make better decisions. They are not tasked with controlling household debt.

And there are limits to what they can accomplish. The law of supply/demand dictates that if supply is cut severely, and demand remains the same, prices will go up. The length of the strike (as was stated) is what will matter here. My opinion is that while rate hikes do help with inflation caused by excess money supply, they may be useless in fighting inflation caused by supply drying up.

The FED told everyone exactly what the conditions for a rate cut would be about 12-18 months ago. It unfolded, as evidenced by job and inflation data. What would have been political, is if they had not lowered rates according to the data that they were presented, after stating explicitly what they were planning to do, well in advance.

The FED will not act to shore things up over a 1/4 -1% drop in GDP from where we are now, unless jobs get hit hard. And even then, they will wait for data, and then the impact will take time to work through the system. They already said they were not planning to go big on further cuts. Unless things get very dire, very fast, we should take them at their word on that.

[ASAP]

Originally Posted by DrVenture

This seems to be a good time to summarize the FEDs function. "The Fed's modern statutory mandate, as described in the 1977 amendment to the Federal Reserve Act, is to promote maximum employment and stable prices. These goals are commonly referred to as the dual mandate."

They are not tasked with helping people with poor financial literacy to make better decisions. They are not tasked with controlling household debt.

And there are limits to what they can accomplish. The law of supply/demand dictates that if supply is cut severely, and demand remains the same, prices will go up. The length of the strike (as was stated) is what will matter here. My opinion is that while rate hikes do help with inflation caused by excess money supply, they may be useless in fighting inflation caused by supply drying up.

The FED told everyone exactly what the conditions for a rate cut would be about 12-18 months ago. It unfolded, as evidenced by job and inflation data. What would have been political, is if they had not lowered rates according to the data that they were presented, after stating explicitly what they were planning to do, well in advance.

The FED will not act to shore things up over a 1/4 -1% drop in GDP from where we are now, unless jobs get hit hard. And even then, they will wait for data, and then the impact will take time to work through the system. They already said they were not planning to go big on further cuts. Unless things get very dire, very fast, we should take them at their word on that.

I am still a little confused here... you said unemployment is only rising due to shedding of excess covid capacity and excess hiring during that time. If that is true as you said, interest rate adjustments will have no impact on that since those jobs aren't coming back... keeping prices stable won't help the consumer after a 30% rise in goods over the past 5 years... so I still don't see how the current rate cut helps the average consumer. Lowering rates will further destabilize that... and like you said a strike could hamper that further.

[ASAP]

Originally Posted by dmatre

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

Do you mind posting the 4 out 5 companies in Q2 that are showing organic revenue growth? Not earnings... i can play the balance sheet and P&L as much as the next guy... i can also merge and takeover a company and do stock buybacks as well... what I can not do is grow my business top line without accounting tricks...or if folks are not giving me money.

[other_evolved]

Originally Posted by ASAP

Do you mind posting the 4 out 5 companies in Q2 that are showing organic revenue growth? Not earnings... i can play the balance sheet and P&L as much as the next guy... i can also merge and takeover a company and do stock buybacks as well... what I can not do is grow my business top line without accounting tricks...or if folks are not giving me money.

Q2 revenue growth for the SP500 was 13% if I recall correctly with 75% reporting higher than expected revenue growth.

[other_evolved]

Originally Posted by ASAP

I am still a little confused here... you said unemployment is only rising due to shedding of excess covid capacity and excess hiring during that time. If that is true as you said, interest rate adjustments will have no impact on that since those jobs aren't coming back... keeping prices stable won't help the consumer after a 30% rise in goods over the past 5 years... so I still don't see how the current rate cut helps the average consumer. Lowering rates will further destabilize that... and like you said a strike could hamper that further.

Shelter/housing is the single largest factor in the calculation of CPI. Dropping of the Fed Funds Rate has helped bring average mortgage rates from 8%+ to just below 7%.

[DrVenture]

"What Is Organic Growth? Organic growth is the growth a company achieves by increasing output and enhancing sales internally. This does not include profits or growth attributable to mergers and acquisitions but rather an increase in sales and expansion through the company's own resources."

[ASAP]

Originally Posted by other_evolved

Shelter/housing is the single largest factor in the calculation of CPI. Dropping of the Fed Funds Rate has helped bring average mortgage rates from 8%+ to just below 7%.

and it has had 0 effect on housing purchases and far more on refinancing... the housing market is entirely stuck.. because well that is a joke of an adjustement

[ASAP]

Originally Posted by other_evolved

Q2 revenue growth for the SP500 was 13% if I recall correctly with 75% reporting higher than expected revenue growth.

60% beat which is not 4 out of 5... and i'd be very curious to see what component of that is driven by price not volume...

[chassis]

Originally Posted by ASAP

Do you mind posting the 4 out 5 companies in Q2 that are showing organic revenue growth? Not earnings... i can play the balance sheet and P&L as much as the next guy... i can also merge and takeover a company and do stock buybacks as well... what I can not do is grow my business top line without accounting tricks...or if folks are not giving me money.

PKOH

Too many examples to list. Many of them private.

[DrVenture]

Refinancing is very helpful to the average consumer, it lowers their housing costs. Lower rates may well spur home sales, too early to tell. It is not the only factor that will come into play. Rates are still projected to go lower. Lower rates typically help with home sales.

I don't care. I can invest in real estate, or not. I can invest in mortgages, or not. I can invest in growth, or not. I can get defensive, or not. I will take what the market gives me and do my best to act upon it.

Arguing theory, or second-guessing what decision makers do is a losing game. Act on what you believe and compare your results in 6 mos or a year to a benchmark. See how your viewpoint works for you against an objective measure. That is what I do.

The only way this thread has any value is if it produces helpful strategies and ideas. So, what are everyone's ideas on how to play this market?

[ASAP]

Originally Posted by DrVenture

Refinancing is very helpful to the average consumer, it lowers their housing costs. Lower rates may well spur home sales, too early to tell. It is not the only factor that will come into play. Rates are still projected to go lower. Lower rates typically help with home sales.

I don't care. I can invest in real estate, or not. I can invest in mortgages, or not. I can invest in growth, or not. I can get defensive, or not. I will take what the market gives me and do my best to act upon it.

Arguing theory, or second-guessing what decision makers do is a losing game. Act on what you believe and compare your results in 6 mos or a year to a benchmark. See how your viewpoint works for you against an objective measure. That is what I do.

The only way this thread has any value is if it produces helpful strategies and ideas. So, what are everyone's ideas on how to play this market?

Who is refinancing from 7% to 8%? This is where the most mortgage activity is currently taking place... but there aren't that many people that are refinancing with moves like that... in fact, it wouldn't be wise to do so if you know math and understand the ROI... especially if there is belief long term rates will go down further.

The decision makers should be working for us... but they don't... they work for those that control the system... i.e. the banks and corporations, so you can feel about that how you feel, i'll feel about it how i feel.

As far as moves in this market... you've only got 2 - keep investing or short everything. Holding cash as seen by the last few years could be incredibly damaging and whether we like it or not, currency will be devalued further as we drop rates.

[DrVenture]

I assume that you have been hanging out at places habituated by libertarians. Is that a safe assumption?

[ASAP]

Originally Posted by DrVenture

I assume that you have been hanging out at places habituated by libertarians. Is that a safe assumption?

about as moderate as it gets... but i have a strange suspicion we voted for the same people

[DrVenture]

Originally Posted by ASAP

about as moderate as it gets... but i have a strange suspicion we voted for the same people

The things you are saying mirror what a Libertarian friend of mine says, almost perfectly. He is also very negative on the government, the FED, the economy and jobs, etc. Hence, my question.

My investing toolbox has more than two choices in it. I alluded to one potential option a few pages back. Fixed Income (bonds and bond fund) absolutely shines when rates come down. If you are sour on the market, and risk-averse, and looking to beat inflation, that is an area to look into. Assuming you are not in your 30's or 40's.

[XutvJet]

Originally Posted by DrVenture

So, what are everyone's ideas on how to play this market?

Unless you're ultra wealthy (multi-multi millionaire with business/lots of real estate/etc), you're not playing this market. If you have less than $10M in assets, you're a tiny fish in a huge pond that really favors the wealthy and big business. They ultimately are the ones tweaking the dials.

The way I invest is super simple and has been extremely lucrative over the past 11 years or so once I started managing our money rather than an expensive, so-called financial advisor that takes 1 to 2% annually of your money in fees to do next to nothing. I'm currently 50 and have a Roth IRA (his and her), traditional IRA (money from a former 401K), 401K (current employer, put in 3% which is the match), and a brokerage account.

I have 80%+ of our money in those accounts in Vanguard SP500 index funds. I also have about 10% in Berkshire Class B, 5% in some random "what the hell stocks", and then about a full years salary+ in a money market (MM)/settlement account within our brokerage account. That MM account collects about 5% interest/dividend.

All my dividends in our retirement accounts are reinvested or shoved to their internal settlement accounts and then once there is enough money, we buy more index funds.

The dividends from our brokerage account are pushed to its MM account. We routinely take a bit from that MM account to buy big ticket stuff like my wife's 2020 4Runner, my 2011 Cayman, new carpet for the house, my daughter's club volleyball fees and expenses, etc. I'll skim some to buy a new truck here shortly. We'd have a ton more money in investments if we didn't skim that account so much over the last 8 years and simply reinvested. But for now, it works for us until our daughter is out of expensive club sports and she's in college (she had a fully funded 529 and she will likely get a full ride). Our 19 y/o son also have a fully funded 529 and we might spend around $200/mo helping him with non-529 expenses.

We own our house and all cars. We've never carried CC debt and use CC points to get free flights and such.

This is the best way I've come up to game the market. I'm sure I could tweak things more so to increase things, but frankly I don't have the time to research it and constantly manage it. With the way things are setup, my portfolio generally tracks the market so that means I generally know how things are going. Every quarter, there are thousands in dividends coming in and being dispersed as well.

[2000cs]

Originally Posted by DrVenture

…
The only way this thread has any value is if it produces helpful strategies and ideas. So, what are everyone's ideas on how to play this market?

I really don’t play the market; generally I’m a buy and hold guy. Days like today I try to buy a bit using dividend income accumulated since the last buy day. But I’m busy helping with storm recovery so not watching closely enough. Typically I’d use limit orders but I haven’t set any.

I expect a lot of “chop” in the US markets at least through the election. We’ve got the usual FED uncertainty, the strike, and now escalations in Israel/Iran. Risk still includes escalation in Ukraine and Taiwan is always on the watch list. Election creates a lot of noise day-to-day but little of substance, although there are some risks and opportunities depending on how the Prez and Congress go (divided government is usually best for the markets).

With that as background, I’m pretty cautious about buying now (limit orders at lower prices), more likely to get in mid October or later as clarity on each of the above issues develops. But I’m not a trader, just looking for the occasional soft spot in the stocks on my list (all funds at this point) to accumulate some more shares.

(I do buy some individual company stocks here and there but don’t have any on the list to buy at this point. Could add one or two at any time, since I’m usually looking.)

[ASAP]

i agree, most people cannot beat a general etf like VOO or any S&P500 general investment (SPY)... some got luck on tech and it could happen again but chances are you won't be as lucky

[ASAP]

DrVenture

Fed is gonna be in a tough spot here lol -

https://www.cnbc.com/2024/10/04/trea...bs-report.html

[vreihen16]

Originally Posted by ASAP

DrVenture

Fed is gonna be in a tough spot here lol -

https://www.cnbc.com/2024/10/04/trea...bs-report.html

Mark my words that a revised jobs report will be posted on or after 11/6.....

[2000cs]

Originally Posted by vreihen16

Mark my words that a revised jobs report will be posted on or after 11/6.....

And it ain’t going to be revised up!

[ASAP]

Originally Posted by vreihen16

Mark my words that a revised jobs report will be posted on or after 11/6.....

everything about the current state of the economy is borderline comical and exactly nothing makes sense anymore... fed funds rate was lowered, yet 10Y treasury yields went up as a result... and now with unemployment supposedly improving... the question again becomes, why are we lowering rates lol?

If the job report gets revised down... it's at least making some sense...but making 0 sense as to why yields are rising... if the job report gets revised up as a few have... then nothing makes any sense anymore. they keep talking about this comical soft landing which supposedly only applies to to the DOW lol

[vreihen16]

Does anyone have an opinion on XAR in these strange global times? I like that Boeing isn't a major component, and the expense ratio seems lower than other similar ETFs.....