Posted on 02/08/2018 2:12:16 PM PST by CincyRichieRich
I'm an investor, and like most here, overwhelmed with the sources to read, the Q Anon stuff, the stimuli, the conspiracies...and now, a few days of stock market drops - including today's 1000 pt drop. I'd like to discuss with anyone who will participate, as to causes, where from here, etc.
If your young you should buy stocks you know or use....when Netfix went public buy a hundred or two hundred shares....and never sell them...or if they go up fifty or a hundred percent...sell half and never sell the rest til you retire...
You are looking for a stock to become an Amazon..
Example would be Apple Computer....it went up and then back to five dollars a share...then back up....
Good book for new investors.. Peter Lynch....
Thanks so much for that post. I have copied it and saved it and will check out your link. I went through a phase of reading financial blogs voraciously for a few years (largely contrarian, including The Daily Reckoning) but, while interesting, it actually paralyzed me as far as anything beyond the safest investments.
There’s a lot of good advice on this thread. It’s something I’ve been thinking about lately. I am (irrationally?) afraid of longer-term (5+ years average maturity) Treasury bond funds because of the huge and growing deficit and unfunded liabilities.
It’s only about 4%. No worries. It’s just a correction.
Stock market movements are primarily due to what stock traders do. You have to understand how institutional quants trade billions in options and futures. The actual stocks are small potatoes.
Walmart indicator and the 10 year bond yield answer a lot of things.
Yeah, but it’s been a pretty frothy market as of late, and so maybe it doesn’t take much to shave a percent or two off.
Your numbers are way off.
Auto loan balances increased by $23 billion, continuing their 6-year trend. Auto loan delinquency rates increased slightly, with 4.0% of auto loan balances 90 or more days delinquent on September 30.
https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2017Q3.pdf
According to the New York Fed report, most of the subprime delinquencies are held by finance companies. While the delinquency rate is around 4% for subprime loans issued by banks and credit unions, finance companies have a 9.7% default rate. Finance companies also hold approximately two-thirds of the total subprime auto loan debt – in essence, verifying the risk factors associated with subprime loans.
Auto loan originations remain high in the third quarter of 2017. The $150.6 billion value reported by the Fed is the second-highest level in over a decade. However, there has been some market correction to reduce the subprime risk. Auto loans to consumers with credit scores below 660 decreased by 8.3% over the previous quarter, while loans for borrowers with scores over 660 increased by 5.4%.
https://www.benzinga.com/news/17/12/10931255/auto-loan-delinquencies-rise-among-subprime-borrowers
And having the RINOs in the Senate go beserk on Spending, and the House looking to cave to Nancy Pelosi on DACA...
Well, if the government is shut down, it cannot overspend *quite* as quickly.
Getting rid of illegal immigrants, visa overstays, and the like would cut a LOT of government spending.
Getting rid of H1-B visas would help a lot more.
When your young you should by a 5 star total stock index.
That way you buys stocks of what you like and many other people and not limiting yourself
This is stupid over leveraged Hedge Funds freaking out about the jobs report which fed the Higher interest rates fears on there massive loans .
There computerized buy sell systems are set up for chaos .
More sellers than buyers.
Sit tight, don’t panic, it will come back.
Still wishing I had had the cash to buy those 30-yr Treasuries at 18% back in 81 or 82...
Enter value investing and patience. Not so good for the tail end of a bull market, very good for when there is blood in the streets.
Cincy, am I to infer from your post that your handle is no longer valid?
What companies (such as ADP, Paychex, etc.) stand to grow from a blooming of new small businesses?
Serious question.
My bad. (Yikes)
Though I've known of some good day traders...never knew one personally. Maybe some are good gambler's..but not my thing.
Sometimes I become a day trader...just because of the circumstances.
A number of factors. Easy to list in arrears, but this was not entirely unpredictable, other than timing.
If you observe the AAII survey of market participants, large numbers of “retail” investors have, after being out of the market, decided that it was opportune to get back into the market after it began making all time highs. This is utterly normal market behavior: To punish the last to the party. When you read the news and hear as this glowing economic boomism, it is a very naive sort of view that the markets will not view this as inflationary.
Perhaps the most salient factor is the behavior of the bond market which, after a decade of near zero rates, now sees rising rates, and ominously, wage gains. The wage gains now being seen are reminiscent of the wage inflation last seen during the 70’s. Markets do not like that. Markets “do” like the tax plan passed recently, but the market has largely absorbed that impact especially considering the meteoric rise since the election of DJT.
There is considerable instability in the government which appears to be coming to a head in the recent Russia developments and the “change in the story” which up until recently has maybe gotten some conspiracy types (like us) going, but now looks like it might generate some serious upheaval. Markets do not like this kind of instability.
So those are some factors that I see. The market is very concerned about the very bad behavior of the bond market. This looks like a change in regime over conditions that have existed for about a decade, so it is not, or should not be considered “subtle”.
Finally, forget not that the market has gone about a decade without more than a single 10% correction. That is very unusual. And, at all time highs, a 4 or 5 or 6% correction (of the type the books tell you is “normal”) is a helluva lot more DJIA points than it was 3000 DJIA points ago. For the past 39 times, it has been right to buy any dip. If you did that, you have NEVER been wrong in the past decade. Any “mistake” you made was fixed in about ten days. The market has grown very complacent about this kind of behavior.
I do not think we are entering some kind of bear market, but it is not impossible. What *is* impossible
While there is good fundamentals that can explain the current stock market drops - by most historical P/E ratio analysis it has been entering bubble territory - which, if that were the cause would be satisfying enough.
But why now, at this time, is a different question, when many have been arguing, on a fundamental values basis. that there ought to be a correction for over a year.
I suspect the timing could be a combination of federal reserve and similar fundamental economic news, along with puts & calls for/against derivative type instruments & index funds; both of which signal buys and/or sales based on robotic algorithms not human decisions.
First off, Cramer basically ran a boiler room operation a couple decades ago. The guy is a crook and it amazes me he has a show on Bloomberg. I don’t trust either Bloomberg or CNBC, as I see their role as distributing money from the outsiders to the insiders (Wall Street).
I also generally regard the markets these days little better than Las Vegas. They seem to have no relation whatsoever to economic reality.
So everything is going great right now. Less people taking unemployment and great employment numbers. Everything is going in the right direction in the economy and only something really stupid, like the Fed seriously raising rates, is going to be a threat.
As for the market, I am loathe to say we are in anything more than a medium term correction. I would not bet against the POTUS the US has. I do think the market is vastly over value so I likely wouldn’t invest in it either.
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