Hi guys and gals!
Looking at the SPY, I’m expecting a decent retracement and pullback given technicals. However, I think many investors see strong economic tailwinds helping fuel a prolonged bull market.
Pros
Cons
Thoughts?
No one knows.
Hard to see anything slowing this down. It’s bizzaro finance where good is good and bad is good.
The pull back in yields pretty clearly sums up expectations - governments are going to accept higher inflation because they have to. I just don’t see any major economy taking their foot off the gas at this point. We’ve built a society on debt and any material increase in rates will significantly hurt the broad market. The fix is in.
All that to say risk assets are the only place to earn a return right now. May be some bumps in the road based on technical analysis (which is mostly utter BS), but the long term trend seems locked In from my vantage point.
I think the most likely scenario is that gold skyrockets, stocks stabilize, and interest rates go back between 10-15% to satisfy China after we default on our debt. We’ll tie in the fact that to please our debtors we’re requiring the Fed to stop forcing liquidity and allow the YOLO debtors of the world to finally go bankrupt and the vicious SPAC spree of 2020 will capture all the value and prop up equity markets while the likes of Citibank/DB/Well-Fargo go completely tits up which will allow for a simultaneous victory declared by the progressives and for washington as we transition into this new era of a digital dollar wherby appreciation and grattitude are the new principles preached by congress in the wake of the “The great Debt collapse”
Taper, no tantrum, has already become the new narrative - which is funny, because I was telling my clients that a few months ago!
So yeah, I really do think you’re going to bleed yourself dry if your investment thesis is to short equity markets just because those two red lines are converging on each other. But for real homie, a one standard deviation move is a buying opportunity 99 out of 100 times. It’s in the math.
edit: and if you don’t take my word for it, take this rando Linkedin influencer post, where he says [ You Can’t Predict. You Can Prepare. 95% of all financial history happens within two standard deviations of normal, and everything interesting happens outside of two standard deviations.]
Edit 2: all that means is that you’re best off only using 2.5% of your portfolio to hedge against a 3 sd move and beyond, but probably better off not shorting altogether. Mind you I bought a bunch of put contracts expiring this week on S&P futures so take this all with a grain of salt.
Thank you for coming to my ted talk.
Would higher price inflation or cost-push inflation lead to higher equity risk premiums independent of the bond market yield decline?
How can the US default on their debt if they own the printing press? As for rates going back to 10% - 15% – did someone develop new technology to revive the dead? We would need to revive Paul Volcker for that.
Oh man! Theta is not your friend!
out of curiosity what is your cagr?
Who’s counting when you’re not paying the mortgage?
I’m SPY ride or die
Depends what they want less in life
In all seriousness though bro, go back through history and you’ll find tons of time periods when stocks rose alongside interest rates.
Luckily there’s about a centuries worth of data at your fingertips - so I personally don’t buy into any of the taper tantrum crap.
Right! There are periods of a rising stock market and rising rates - but off a pandemic?
I don’t see any scenario where central banks give up power and let us disrupt the power held by global elites. I think, vaccine passports, facial recognition, and all the monitoring the government does is to keep control. So people that say Bitcoin is decentralized and the government can’t do anything, I think are wrong.
The US cannot be a super power forever. Every great empire collapses at some point. I would rather Finland be the next super power, though.
I agree with you, except that the US can be a superpower forever…it’s just that the total number of superpowers can grow.
in terms of net worth i have hit another milestone. over 600k. i have decided for net worth calc not to include student debt. i figure if i was a corporation. i would offset that debt with intangible assets anyways so my net worth should be unaffected. so f u guys. my increasing monthly payments over time should hinder the growth though assuming my cash flows dont outpace which it prolly will. as of right now my CAGR since inception is about 20% vs 15% for spy.
How much negative yielding debt is floating around in Europe? Seems like that would have to work itself out first long before we see rates spike in the US. Even then, the yield chasers are probably lined up around the world chomping at the bit to buy up whatever the fed decides to let them chew on.
Stock markets are going up - most likely.
on a nominal basis about 18 trillion vs 281 trillion in total debt in the world. on a real basis. im pretty sure its far more considering all us government debt has negative real rates. lol
Blah blah blah.
TL;DR: stonks only go up
haha in a nutshell. i actually have statistical data on this using shillers data. granted some of the data pre 1950s is questionable
baller alert
came out of retirement to let everyone know the SPY is at stupid levels and the turn is just so obvious. corporate profits to GDP is ~14%, versus a pre-COVID high of ~12%, an internet age average of ~10% and all-time average of ~7%. pandemic support ending should cut earnings by ~15% (14% to 12%), rising wages and input costs (commodities, corporate debts costs rising from lowest ever levels, etc.) should cut by another ~20% (12% to 10%). So earnings looking like they’re about to drop ~30% sometime in the upcoming year or so and yet the market is still trading at a ~20% premium to average on these falling earnings, even when using forward earnings which are likely optimistic? SPY’s days are numbered.
TINA will turn to GTFO pretty quickly. TINA only works after GTFO has already manifested itself. Is manifested a word?
are you calling a top my canadian brother?
