This time it's different ? I’ve never seen such heightened speculation across the wide investment spectrum. There’s been spec before - but I fear the new crop of retail investors is unprepared for what may happen. Should we worry? Not a lot. But a good analogy might be driving 70-80 mph on a crowed interstate surrounded by other nearby vehicles operated by drunks or folks who aren’t watching the road. All can seem perfectly “normal” until someone begins swerving out of control and brake lights begin flashing in every direction. In the end, everyone pays for the excesses of a few.
Noteworthy among small retail investors, there’s significant leverage being employed. And there has arisen a plethora self-made internet gurus who amass large followings ready to pounce on their next recommendation - or perhaps sell some hapless stock all on the same day. As the M* piece notes, markets can remain in a state of elevated exuberance for years or even decades. But, if history is a guide, the eventual declines can last for years at a time and be brutally painful.
I can’t recall such wild swings in the value of some assets. Energy stands out to me, with crude oil futures going negative in early 2020 and than rapidly gaining about $140 per barrel to $86 about 15 months later. This leads me to believe there’s a lot of hot money chasing assets. If it’s happening to oil, it’s likely happening to other assets. Can’t even get my head around crypto. But it makes the above mentioned swings in oil meager by comparison. Jamie Dimon, head of J.P. Morgan, is no idiot. His assessment is that Bitcoin is worthless.
There’s notably less public concern today than in the late 90s before the “tech-wreck” which saw the NASDAQ drop about 50% in a matter of days, while dragging down other markets along with it. It was more than a decade before the NASDAQ got back to its 2000:high. Where is Alan Greenspan with his “irrational exuberance” warnings of the late 90s? Or Vanguard with its “Trees don’t grow to the sky” cautionary statement to its investors around than?
What to do? Anybody’s guess. None of us can predict the future. Saying that many assets are in speculative territory does not lead to any particular solution. Some of the answer resides in age, risk tolerance and individual skill-set. Some in ancillary issues like pension, home ownership, dependents, life style. A good portion of the answer, however, resides in one’s macro view of how things will evolve going forward. For example, one view is that asset prices will eventually deflate. Another view says paper currencies will be devalued (thru price inflation) making today’s asset prices reasonable. Politics (often heated) here and abroad, has also become an ingredient to be reckoned with when trying to assess the macro view. And there exists, too, a middle road on which there may be winners and losers. We tend to segregate “investments” into domestic stocks and bonds. Simplistic of course. That overlooks potentially attractive foreign markets. And there are assets like real estate, commodities, infrastructure, floating rate loans, gold and silver; as well as derivatives like puts, calls, options, futures that a skilled professional can use to advantage or to reduce overall risk in heated markets. Funds that lean on such approaches have been highlighted recently in the MFO commentary. While I own some such funds, I don’t find them particularly worthy of note.
This time it's different ?
Nvidia Stock Tops $750 Billion Market Cap. This Analyst Sees Giant Metaverse Opportunities.
Wealthtrack - Weekly Investment Show Nov 6th Episode:
2022 Contribution Limits The contribution limit for 401k/403b/4
57 plans will increase from $19,
500 in 2021 to $20,
500 in 2022.
The catch-up contribution limit remains $6,
500.
Contribution limits and catch-up contribution limits for Traditional/Roth IRAs are unchanged at $6,000 and $1,000 respectively.
HSA contribution limits for single coverage will increase from $3,600 in 2021 to $3,6
50 in 2022.
HSA contribution limits for family coverage will increase from $7,200 in 2021 to $7,300 in 2022.
The catch-up contribution limit is unchanged at $1,000.
Refer to the article for additional contribution/income limits.
Link
Nvidia Stock Tops $750 Billion Market Cap. This Analyst Sees Giant Metaverse Opportunities.
Nvidia Stock Tops $750 Billion Market Cap. This Analyst Sees Giant Metaverse Opportunities. https://www.barrons.com/articles/nvidia-nvda-stock-record-high-metaverse-51636044280Nvidia Stock Tops $7
50 Billion Market Cap. This Analyst Sees Giant Metaverse Opportunities.
Updated Nov. 4, 2021 4:12 pm ET / Original Nov. 4, 2021 2:47 pm ET
Nvidia stock surged to a record in Thursday trading after analysts at Wells Fargo raised their price target by about 30%, saying the videogame- chip powerhouse was well positioned to help build the metaverse.
Meta
Nvda
One Trillion dollars industry soon!!??
? Next Apple Google 1
5 20 yrs ago??
Can read whole article incognito
November Commentary is live! The Bank of America has now joined the “dead for the long term” party. They now project that the S&P 500 will return somewhere between zero and a bit below zero annually for they next ten years. That’s perfectly in line with Research Affiliates’ projection of a negative 0.5% annual return for the broad US stock market and wildly more optimistic than GMO’s regression-driven estimate of negative 7% annual returns for the next seven years.
Brings to mind “If a tree falls in the forest ...” :)
Regards
Women May Be Better Investors Than Men I didn't interpret your comment that way.
Speaking from experience, sometimes doing nothing is the best option but it may be difficuilt not to tinker.
I believe Jack Bogle said: ""
Re;
“Don‘t Do Something - Just Stand There!” David has used the expression with effect in one or more of his
Commentaries.
Bogle was a class act. Would like to have heard his take on today’s markets. While I tinker a lot, fortunately it’s with only 2-3% of assets - just around the edges. Enjoy it. But I’d have more money if I’d sunk 100% in PRWCX 2
5 years ago and followed with a “RipVanWinkle” act!
Some reads from Schwab _ Liz & company. And this,
The SP500 keeps on making higher highs, as the effects of QE4 are still being felt in the banking system, and in the stock market. But there is a troubling divergence among some of the most liquidity sensitive investment vehicles, the high yield corporate bonds. Their A-D Line was leading the way higher ever since the December 2018 bottom, but not any more.
It is a “condition”, not a “signal”. The wise traders will accept this warning, and use it to help them look for the final moment when the uptrend in prices is at its end. And those same wise traders will also remember that divergences can sometimes rehabilitate themselves.
troubling_divergence_in_hy_bond
Sprott Uranium Miners ETF in registration
2021 capital gains distribution estimates (mutual funds and ETFs) Morningstar emailed a note about CG exposure today. Let me know if you think it warrants a separate post. It reads, in part
Morningstar’s associate director of equity strategies, Christopher Franz today published the
Capital Gains Roundup for 2021, evaluating distribution estimates for some of the largest fund families.
Highlights include:
- Based on preliminary estimates from fund families large and small, growth funds once again will make significant distributions, but this year resurgent value strategies will make some big distributions, too.
- A confluence of another year of robust performance and the ongoing trend of investors swapping out of traditional active vehicles and into exchange-traded funds and other, mostly passive, vehicles have led many managers to realize gains to rebalance their portfolios and meet redemptions.
- Many prominent T. Rowe Price funds will make meaningful distributions, and some are closed to new investors, which can cause managers to realize gains to meet shareholder redemptions instead of satisfying them with cash inflows.
- Several Fidelity funds are expected to pay a distribution of more than 5% NAV; the large, widely followed, and Silver-rated Fidelity Contrafund expects to payout 8% of NAV on December 13.
- A few passive funds at Columbia Threadneedle, which are supposed to be more tax-efficient, estimate they will distribute gains of almost 10% NAV in December.
Women May Be Better Investors Than Men
FOMC Statement "The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In light of the substantial further progress the economy has made toward the Committee's goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $70 billion per month and of agency mortgage‑backed securities by at least $35 billion per month. Beginning in December, the Committee will increase its holdings of Treasury securities by at least $60 billion per month and of agency mortgage-backed securities by at least $30 billion per month. The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook."Link
