Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

I got myself positioned, slowly, over the last year. I have dividend income balanced for almost equal monthly payments. Well, almost balanced, I can't really get it even without making investments I don't really want to make. I am pretty comfortable with sector exposure, recession or not. Ready for whatever happens!

 

You should have a chance. The Dow is averaging 400+ point swings daily through August so far. And it's about flat, so that's in both directions.

 

here we go. History repeats itself. Fed cuts rates - then the yield curve inverts... then wait about 9-12 months and then wabam. Or maybe sooner since everyone "knows" that's how it works at the market fulfills the prophecy on its own.

Still have a chunk of cash ready to deploy whenever.

 

as this chart shows, just about anything can happen. When and where to time this is still basically impossible - sometimes the market goes down while the spread goes down, sometimes there is a delay, other times it happens before the spread tightens... since the market hasn't done the latter, we can only wonder when it will happen. My guess is the algos will yank the markets down in line with the BP spread.. I have a feeling we will not have a 9-12 month delay period. Obviously we will need to see a lot of junk rated corporate debt go into default before the warning signs really start flashing. Other than subprime auto loans, I don't see any other vulnerabilities - other than maybe the trade war, or a massive increase in unemployment (which would only follow the other possibilities mentioned)

 

There are lots of inputs and historical data points to look, but it seems to me that this recovery out 08' has been like no other. Mortgage interest rates being a prime indicator. As such I dont know what is really relevant indicators-I am still processing/ learning but my thoughts is what is everyone's cash position corporate/individual? I am thinking that its strong when compared to pre 08'. Strong cash positions means more opportunity buyers are in play- unlike 08' when almost everyone was heavily invested/over extended on credit. Length of time at the inversion point, as pointed out, should be watched but not concerned...yet.

 

I am starting to think (as much as I hate to say it) that the inversion is different this time. There are a lot of unprecedented things going on. The bond market is signaling recession, but everything else (including equities) is signaling booming economy. Perhaps the issue in the bond market is being driven by foreign countries parking their money in our bonds (because of their own problems, including negative rates), which would actually make it different this time. I am just afraid we will end up in a recession by our own doing (self-fulfilling prophecy based on the bond signal).

 

I don't disagree but isn't that the stock market in a nutshell? Eventually if we speak about a recession enough then it will happen

 

I'd say the market is irrational in both directions, but over time, fundamentals drive prices. Holding a quality company for 10 years will always end up being a good idea.

 

Fundamentals drive prices in a free market...but unfortunately two of the biggest economies in the world aren't exactly following that philosophy and instead subsidizing and hiking tariffs thus fucking up the market

 

Yawn....I've got years to go so the day to day isn't important.

 

I do agree, but I think over long periods of time, fundamentals still drive prices. The manipulation is short-term noise in my opinion, but if a company like Walmart keeps selling things, their share price will reflect that over the course of decades.

 

2/10 yield curve no longer inverted

 

most of the overleveraged debt is at the corporate level instead of in MBS and derivatives and shady banks and investment firms. Once this debt starts to default there may be a cascading effect. For now, ship is still in tact. That being said, there are a number of shadow banks that are taking on more risky loans to consumers. Hence the subprime auto loan fiasco.

 

Funny, I'm looking at the treasury rates here:
https://www.treasury.gov/resource-c.../Pages/TextView.aspx?data=yieldYear&year=2019

And I don't see any recent dates where the 2/10 year spread was negative. Perhaps it was during intraday trading.

That being said, the treasury yields for longer term rates are starting to flatten out relative to the yield curve. Eventually the 20 and 30 year yield curve may flatten out too, then the yield curve will definitely be inverted. It used to be a fairly pronounced "hump", but has been flattening. It may be a few months before that happens. It seems like the Fed rate cut was simply a way to keep the yield curve happy, especially since longer term yields have been dropping like a rock all year, and is why they did not hike any more this year. Too little, too late, would be my guess.

At the rate the longer term yields are dropping, another rate cut is 99% likely. The Fed cannot control longer term interest rates, they can only control short term ones. Their room for doing so is extremely limited though, and their control on a yield as far out as 2 years is still very limited. We may see ZIRP again soon. Perhaps we will join our brothers and sisters in Europe and Japan and start doing NIRP. Then get ready for asset prices to blow up even more.

There is the possibility that people are waking up to the insanity that is corporate debt, and are rushing to shorter term bonds. That is my only educated guess.

 

well, I've lost my ass on GE the past two days for something that may or may not have any merit!

I was up about 8% now down about 25%. rough guesstimates on the positive side and approximate on the downward side.

 

Give it some time, that report either is or isn’t true. I think the share price will get sorted out with that.

 

honestly, it's super risky. But I'm thinking about selling off my SNE shares which are over 10% right now and throwing it at GE while down.

Super risky, but it's the game we play I guess.

 

I believe the report, and predict they go to zero. Of course it could be the exact opposite of that, but that’s my take on what I’ve heard so far.

 

A little clip of my corporate strategist Edward Jones dont panic email update-

"Falling long-term rates and an inverted yield curve are cautious signals that should not be dismissed. In the past, the inverted yield curve (using the three-month bill rate) has been a reliable signal of a recession. However, it's not very timely, since it has led a market peak by an average of nine months and a recession by 16 months, ranging from six months to more than three years.

Fundamentals matter
Lower interest rates globally, helped by expectations of additional Federal Reserve rate cuts, are also an input to the economic engine. To the extent low rates offer support to the economy, this is broadly supportive for the stock market over time. As a result, we think the fears have run well ahead of the fundamentals, which is why we recommend staying invested in an appropriate mix of stocks and bonds based on your comfort with risk and goals.