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Leon Cooperman - Fed Created Speculative Bubble / Bloomberg Interview
This guy sounds like he’s been around the block a few times. Not investment advice. Just a healthy dose of perspective on many aspects of investing. Heavy on current valuations. Some mention of bonds and the traditional 60/40 portfolio.
Well he does say bonds are return free risk & now is the time you should want to get into a hedge fund. He claims he knew in 2008 you did not want to be hedged, you wanted to be balls out (a steam engine reference). I’ll tell ya though, I have bought into the debt and deficit scare for 40 years - I’m beginning to think no one’s ever paying the piper.
David, Are you advocating MMT? I don’t think the country should have a balanced budget but if interest rates rise, servicing the debt will take a bigger and bigger slice of the pie. I know you’ll say we are paying ourselves - but that doesn’t include foreign held Treasuries. Additionally, servicing the debt is just another transfer scheme. Tax payers pay in, bond holders take out - the 2 groups probably overlap, but they are not one in the same.
Consider the following: National debt as a share of the economy will reach a record next year, reaching 108% of gross domestic product — more than the 106% milestone we hit just after World War II. As things stand right now, debt will hit 121% GDP by 2030 and a staggering 220% of GDP by 2050. Deficits of this size will take years to rein in, so the sooner we start thinking about how to change the trajectory of our budget, the better.
If you watch the video, Cooperman looks like he’s sitting on the beach on a tropical island. But at the end Tom asks where he is and Cooperman says he’s in New Jersey in front of a green screen. Not sure I believe it, but kind of funny.
If you watch the video, Cooperman looks like he’s sitting on the beach on a tropical island. But at the end Tom asks where he is and Cooperman says he’s in New Jersey in front of a green screen. Not sure I believe it, but kind of funny.
That sure looks like somewhere in the Keys - likely the lower half where there’s islands almost everywhere you look. But OMG the price of things down there.
David, Are you advocating MMT? I don’t think the country should have a balanced budget but if interest rates rise, servicing the debt will take a bigger and bigger slice of the pie. I know you’ll say we are paying ourselves - but that doesn’t include foreign held Treasuries. Additionally, servicing the debt is just another transfer scheme. Taxpayers pay in, bondholders take out - the 2 groups probably overlap, but they are not one in the same.
Consider the following: National debt as a share of the economy will reach a record next year, reaching 108% of gross domestic product — more than the 106% milestone we hit just after World War II. As things stand right now, debt will hit 121% GDP by 2030 and a staggering 220% of GDP by 2050. Deficits of this size will take years to rein in, so the sooner we start thinking about how to change the trajectory of our budget, the better.
There probably are points where the debt/gdp ratio tips and alone all by itself there is really bad outcome from it, but I have not read that anyone knows where those tipping point ranges even are. As you probably have read, the WW2 deficit was never 'reined in'.
The key key key point is what the borrowing is spent on, investment and disaster relief and so on, improvements, or on services cuts and transfers to the already rich and corporations.
@davidrmoran, if you are tentative about owning equity "funds", waiting for that inevitable drop, how about the idea of holding equity ETF's with a trailing stop order? I did this about a month ago with QQQ. I bought a chunk with a 5% stop-sell order. If we get a sudden drop the sell order will kick in and I will keep the profits, and then have time to reassess later. In the back of my mind I'm wondering if this is the way to go with most of what I hold in mutual funds now.
@MikeM: Are you playing prevent defense ? What happens when the QB is sacked & the ball comes lose & the defense picks it up & returns it for 6 TD !! In other words everything doesn't go up after a purchase. So the worst outcome would be a loss of 5% . I see no profit when that happens.
But's let's turn your comment around, "what if" you are staying out of the market, holding excessive cash while the market goes up (as davidrmoran alluded to) because you just know there is going to be a fall at some point and 2 months later you find the market is up another 10%.
A stop-order is 'prevent defense' from getting in at just the wrong time. It limits that risk and gives you the prospect of higher returns by staying in the market.
...I see no profit when that happens.
Let's turn that around. I see no profit keeping everything in cash as the unpredictable market is trending up.
In other words everything doesn't go up after a purchase
Of course not. That's the (minimized) risk you take with this idea. I bought QQQ 3 weeks ago when I thought it was already very high. It's up +8% from my buy. Turn it around and you can say I "risked" losing that 8% gain by being in cash waiting for a QQQ pullback.
The pullback will happen no doubt. But being out of the market just waiting for the pullback to happen is a risk also.
So to sum up are discussion, ETF +1 , if thinking to get back into the market. Bills 17- Packers 16 ! Derf @MikeM: Did you throw all into ETF or will you buy in steps? I'm thinking ave. in might also be a better risk provider.
Oh gosh @Derf, I don't have the guts to do anything "all-in" . I'm well diversified through my Schwab robo account and my self managed account combined. I'm really trialing this stop-order idea in my self managed. Basically I sold a chunk of a mutual funds, AKREX and YAFFX, and moved that money to QQQ with the stop-order. I wanted to reduce equity because I also believe valuations are very high but I did not want to guess when the next big drop will come (stay in until Mr. Market decides a pullback). Granted, this type of action isn't for everyone but it is no different really to trend following ala Junkster or FD. At least in my mind. You just take the emotion out of it and let the computer do the work. Same potential for being whip-sawed too. Prevent defense is now the new term I'll use for it.
Last I looked, Schwab said my over-all was about 43/35/10/12 (eq/bonds/cash/other). The "other" category is an interesting combination of gold and alternative hedge type funds and ETFs that are non or loosely correlated to equity.
Bills 17- Packers 16 !... Is that the next super bowl prediction!!!
A question for you, @MikeM. Does that stop loss work as a rolling lose !! In other words you said you were up 8% & if the market would crash tomorrow you'd still be up 3% . Or does the stop work only when you hit your staring amount minus the 5% ? Thanks for your time, Derf
@Derf, the 5% stop is from the ETFs high. If it continues to go up another 20% before seeing a 5% drop from it's high I theoretically keep the gain.
I say theoretically because there is a risky caveat to a stop order. If for some reason the market opens with a huge drop, the sell order may not take instant affect at 5%. It could kick in much less at the market opening price. If that opening market drop moves back up in the same quick fashion for some reason, you got whip-sawed. Think of when the flash crash occurred. That was disastrous for many institutions that use algorithms to automatically sell.
I wouldn't play this with a huge chunk of holdings because of the risk mentioned. I have used it on individual stocks for a while and just recently on using it on QQQ.
Comments
otherwise not arguing,
will listen, every day of being so much in cash it goes up, way up, SP500 heading toward 3500 ...
agony, but I have done this agony before, and worse agony w plunges
Stay safe, Derf
Are you advocating MMT? I don’t think the country should have a balanced budget but if interest rates rise, servicing the debt will take a bigger and bigger slice of the pie. I know you’ll say we are paying ourselves - but that doesn’t include foreign held Treasuries. Additionally, servicing the debt is just another transfer scheme. Tax payers pay in, bond holders take out - the 2 groups probably overlap, but they are not one in the same.
Consider the following:
National debt as a share of the economy will reach a record next year, reaching 108% of gross domestic product — more than the 106% milestone we hit just after World War II. As things stand right now, debt will hit 121% GDP by 2030 and a staggering 220% of GDP by 2050. Deficits of this size will take years to rein in, so the sooner we start thinking about how to change the trajectory of our budget, the better.
https://markets.businessinsider.com/news/stocks/billionaire-investor-leon-cooperman-12-best-quotes-2020-6-1029330190#
There probably are points where the debt/gdp ratio tips and alone all by itself there is really bad outcome from it, but I have not read that anyone knows where those tipping point ranges even are. As you probably have read, the WW2 deficit was never 'reined in'.
The key key key point is what the borrowing is spent on, investment and disaster relief and so on, improvements, or on services cuts and transfers to the already rich and corporations.
In other words everything doesn't go up after a purchase. So the worst outcome would be a loss of 5% . I see no profit when that happens.
FWIW, Derf
But's let's turn your comment around, "what if" you are staying out of the market, holding excessive cash while the market goes up (as davidrmoran alluded to) because you just know there is going to be a fall at some point and 2 months later you find the market is up another 10%.
A stop-order is 'prevent defense' from getting in at just the wrong time. It limits that risk and gives you the prospect of higher returns by staying in the market. Let's turn that around. I see no profit keeping everything in cash as the unpredictable market is trending up. Of course not. That's the (minimized) risk you take with this idea. I bought QQQ 3 weeks ago when I thought it was already very high. It's up +8% from my buy. Turn it around and you can say I "risked" losing that 8% gain by being in cash waiting for a QQQ pullback.
The pullback will happen no doubt. But being out of the market just waiting for the pullback to happen is a risk also.
Bills 17- Packers 16 !
Derf
@MikeM: Did you throw all into ETF or will you buy in steps? I'm thinking ave. in might also be a better risk provider.
Last I looked, Schwab said my over-all was about 43/35/10/12 (eq/bonds/cash/other). The "other" category is an interesting combination of gold and alternative hedge type funds and ETFs that are non or loosely correlated to equity.
Bills 17- Packers 16 !... Is that the next super bowl prediction!!!
Thanks for your time, Derf
I say theoretically because there is a risky caveat to a stop order. If for some reason the market opens with a huge drop, the sell order may not take instant affect at 5%. It could kick in much less at the market opening price. If that opening market drop moves back up in the same quick fashion for some reason, you got whip-sawed. Think of when the flash crash occurred. That was disastrous for many institutions that use algorithms to automatically sell.
I wouldn't play this with a huge chunk of holdings because of the risk mentioned. I have used it on individual stocks for a while and just recently on using it on QQQ.