Fiddling about with stocks, funds, etc. No conspiracy theories, please.

1,475 posts in this topic

What are you investing in now? Tins of baked beans? US Dollars? Puts on SPY?

 

1 minute ago, RenegadeFurther said:

 

This won`t be a recession but a depression.

 

 

It must be exhausting worrying about stuff you have no control over.

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20 minutes ago, fraufruit said:

 

Not good for mine. Tanked again yesterday.

I mean strong dollar is good for US stocks if you're holding them from outside US. Mine held quite well, around 1-1.5% drop.

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27 minutes ago, RenegadeFurther said:

 

This inflation is caused by 10 years of money printing by the central banks. There is still trillions of dollars and euros out there.

Correct, but inflation will still be transient.

 

Quote

Also look at the national debt of the US, Italy, the UK.

I've predicted a sovereign debt crisis 3-4 years after covid... this will come. But with it, comes also lower inflation.

 

Quote

 

For years Governments justified taking on short term debt because interest rates were so low.

 

This won`t be a recession but a depression.

It can be, if governments try to control inflation too much. There is the temptation to raise interest rates to control inflation, but if done too much, this will create a depression.

So let inflation go on! It will drop to half next year if nothing is done. It can drop much more and cause a depression if central banks raise interest rates!

My point: it's better a transient high inflation for the next 18 months than a new economical crisis. These current fed hikes are overcorrection, if you think as an engineer.

 

The problem here is that for the common people there are winners and losers with high inflation.

Winners:

- employees who can change jobs. Prospects of better salaries. Job market is good, historic low unemployment on OECD average

- real estate owners

- high risk investors

- unemployed, as there are currently many job offers

 

Losers:

- retired people which see their conservative investments lose value

- employees who have no negotiation power and/or can't change jobs, e.g. public service employees

- unemployed, when state does not raise subsidies at same level of inflation

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1 hour ago, MikeMelga said:

Correct, but inflation will still be transient.

 

I've predicted a sovereign debt crisis 3-4 years after covid... this will come. But with it, comes also lower inflation.

 

It can be, if governments try to control inflation too much. There is the temptation to raise interest rates to control inflation, but if done too much, this will create a depression.

So let inflation go on! It will drop to half next year if nothing is done. It can drop much more and cause a depression if central banks raise interest rates!

My point: it's better a transient high inflation for the next 18 months than a new economical crisis. These current fed hikes are overcorrection, if you think as an engineer.


There is significant research in academia in the application of a PID-control strategy to the economic management of central banks. As a control engineer I always liked the idea, I wonder now if anyone that matters in the major central banks has ever heard, understood or tried it (I wouldn’t bet on it).

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1 hour ago, MikeMelga said:

 

- unemployed, as there are currently many job offers

 

 

 

What a ridiculous thing to stay.

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The Fed can lower interest rates just as fast as they raise them. Already talk of this happening in 2023.

 

I'm in the loser category - retiree living from current investments. Luckily, my broker had plans for a bear market. Basically, enough cash to live from until things turn around. I have no fear. Yet. 

 

I, too, think things will calm down when the Ukraine situation turns around. The supply chain was already fucked from covid. That will improve as time goes by.

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13 minutes ago, fraufruit said:

The Fed can lower interest rates just as fast as they raise them. Already talk of this happening in 2023.

 

I'm in the loser category - retiree living from current investments. Luckily, my broker had plans for a bear market. Basically, enough cash to live from until things turn around. I have no fear. Yet. 

 

I, too, think things will calm down when the Ukraine situation turns around. The supply chain was already fucked from covid. That will improve as time goes by.

 

The fed hasn`t even started QT yet.

 

 

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1 hour ago, mtbiking said:


There is significant research in academia in the application of a PID-control strategy to the economic management of central banks. As a control engineer I always liked the idea, I wonder now if anyone that matters in the major central banks has ever heard, understood or tried it (I wouldn’t bet on it).

Exactly! Glad to find a guy that understood what I meant with that analogy!!

I think they understand, but there is political pressure to reduce inflation faster, even it means a depression later on.

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2 minutes ago, RenegadeFurther said:

 

QE created a 1000 zombie companies.

 

What happens to all those zombie companies when interest rates rise?

That's why raising interest rates too much is stupid. Most are not zombies. For example right now there is strong investment in cutting tech dependency to China and Taiwan, by creating battery factories and wafer foundries and chip factories in europe and america.

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7 minutes ago, MikeMelga said:

That's why raising interest rates too much is stupid. Most are not zombies. For example right now there is strong investment in cutting tech dependency to China and Taiwan, by creating battery factories and wafer foundries and chip factories in europe and america.

 

It more about credibility than raising interest rates.. As soon as the markets lose credibility in a central bank then it is game over.

 

Look at Argentina, Turkey, Sri Lanka etc.

 

 

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5 hours ago, MikeMelga said:

- real estate owners

 

with high interest rates, and lower purchasing power, shouldn't the demand for real estate dramatically fall, which would lead to the reduction of prices or maybe the burst of a buble?

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30 minutes ago, TurMech said:

 

with high interest rates, and lower purchasing power, shouldn't the demand for real estate dramatically fall, which would lead to the reduction of prices or maybe the burst of a buble?

 

I think that is currently happening in certain markets in the U.S. The bubble has popped.

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Its still only 3 %  to 3.25, nothing to what I have seen during the 1980's.

 

US Federal Reserve raises interest rates by 0.75% | News | DW | 21.09.2022

 

At successive meetings throughout the year, the leaders of US Federal Reserve banks have indicated they will continue to pursue more rate hikes, potentially holding the benchmark rate above 4% for an extended time as inflation persists.

 

I think higher rates will be with us for a while, maybe years, even after inflation starts to reduce. Inflation was  running at nearly 5% even before the Ukraine war, there are other factors at work here, not just the Ukraine war. 

 

Certainly, in my target house market prices are still going up.

 

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1 hour ago, TurMech said:

 

with high interest rates, and lower purchasing power, shouldn't the demand for real estate dramatically fall, which would lead to the reduction of prices or maybe the burst of a buble?


That’s one side effect (even though while the real price falls the nominal price may not) and only really affects those who bought recently and/or need to sell fast for whatever reason. On the other hand, for those who just hold on to their properties periods of high inflation help reduce (fixed rate) mortgage debt to nothing and after the crisis real prices will rise again. And if people won’t buy they need to rent even more, ergo rental income  goes up in times of high interest rates.

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23 minutes ago, fraufruit said:

 

I think that is currently happening in certain markets in the U.S. The bubble has popped.


Once in a while I listen to Dave Ramsey. I fastforward his political and religious views and hear what he has to say about the market and specially US real estate - there he knows his stuff. He’s 100% convinced the prices won’t generally drop in the US to to the high inflation and lack of supply. We’ll see.

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But they are dropping in some areas. At least I've read some articles about it. It's kind of a backward supply and demand thing. If people don't want to borrow at high rates, the prices must come down. Some people must sell in order to relocate for a job or whatever.

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3 hours ago, TurMech said:

 

with high interest rates, and lower purchasing power, shouldn't the demand for real estate dramatically fall, which would lead to the reduction of prices or maybe the burst of a buble?

Doesn't matter if it drops, it already went up hugely in the past 3 years. Whoever bought more than 3 years ago is doing great, even if prices fall next.

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