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If you feel that reversion to the long-term mean is pending, you are probably holding off on any large buys. But if you really feel that a catastrophic plunge is pending - then maybe you either go short or hold 100% cash, no?
Logic dictates that the markets should have been reacting to new US policy changes that will effect the global economy, but apparently logic plays no part in the short-term market outlook.
precisely. I'm more defensively positioned in bonds, but I can't bring myself to go run and hide completely. Logic has nothing to do with it, particularly in the short-term movements. Mr. Market ALWAYS overreacts, both upward and downward. Statistics come, statistics go. My own strategy does not match my age: I'm investing for the most part, for heirs. 44 stocks. 47 bonds. 5 cash. 4 other.
I haven’t looked at gold over the weekend, but my understanding of U.S. equity futures is that they don’t begin to trade until sometime Sunday evening. I may, however, be incorrect in that.
There are so many different ”balls in motion” right now on the domestic political front plus U.S. relationships with former allies and foes that it generates a lot of uncertainty and turmoil.
I think the risk is small - but still very real - of a very deep recession. The high cost to consumers of tariffs (a form of tax) is worrisome. And I share @Junkster’s concerns about the massive government layoffs possibly leading to a weaker economy (and affecting lower rated credit). Once a downward spiral begins it’s not as simple as the Fed just punching a few buttons. But they’ll try their best.
Not much mentioned is the “fear factor”. If retired Moms & Pops start to worry about their Social Security or Medicare being there tomorrow, they may cut back on spending. Walmart seems to have noticed such a trend and sounded a warning in their earnings guidance last week. One reason markets were down Friday.
Still - Odds are we will muddle through this. That’s not to ignore valuations. Some appear out of whack. If so, they can correct at any time with or without a recession.
@hank, I stand corrected. Yes, the future market starts to trade on Sunday evening. What I saw was from Friday. Need more coffee to wake up. My post is corrected.
I'm fairly certain that the Fed and/or Jerome Powell will be blamed for any market downturn or recession.
Oh, I do not think so, not at all. I think the tide is turning, a little bit. Not that Destructoman and Leon and the Muskenjugend will ever face their proper share of righteous anger, but this nonstop escaping from everything, in the ecosystem of depraved evil lying, I think that that will modulate and is modulating. Inflation, market crash, public revulsion at cruelty and bloody Ukraine sellout, these will come together and have an effect.
Still, Russia finally has won the Cold War in the same way the South finally has won the Civil War. What an ending to the postwar Boomer era.
Sold 95% of my VONG (Russell 1000) -- s&&T is going to hit the fan... all the fed layoffs AND all of the supporting businesses those thousands of workers use... it has got to effect the economy in a bad way. Many university's losing their research funding, thousands more in limbo. That and all of our "past" allies now looking for alternative options other than the USA. I'll sit on the sidelines and watch the mess unfold and this administration crash and burn. Down to 40% stock from 50%. I think the bully is going to get punched in the face at some point. Yes, ~50% of "our" population support him but now he's pissing off ALL of our allies. I support some of what he's doing, pushing NATO to support themselves, no transgender men in women's sports etc... but not how he's doing it. When things go south all the unqualified people he put in power will fold. Sorry for the long post but it is buy/sell "WHY".
In the IRA: Yesterday I sold FLOT and PULS, bought FLTR to go with VRIG and USFR. That's enough float for now.
Remaining proceeds will likely go into THOPX and MNHYX. Thinking about selling FFRHX; bank loans have been in the doldrums. Waiting to see how the next episode of Tariff Theater: Beggar thy Neighbor plays out.
“Globalization” was, I think, unjustly scapegoated as a cause of lower income workers’ distress in recent years. A lot of these swing voters felt they could help their situation with an administration that imposed heavy tariffs. Those people may have been wearing blinders, as some are beginning to realize that the “cure” for free-trade / globalization is going to be worse for them than the “blight” they railed against.
From the IRA: Sold VRIG and replaced it with BUBIX. Sold USFR and replaced it with SCHO. When the dust settles, I'll look at BIMIX, THOPX, and MNHYX. For the time being, bonds with a little duration seem to be doing better than the floaters.
For the moment, I am not convinced that the new taxes on imports will cause inflation, although they will raise prices. In this case, the higher prices will not be the result of too much money chasing too few goods. IIRC, taxes on goods tend to discourage purchases. So I think we are more likely to see switches in buying habits to cheaper goods, or doing without.
Perhaps the potential for bond vigilantism will come into better focus when Mr. Market's attention span swings to the budget process.
When the facts change, or even become apparent, I'll be ready to change my mind.
In IRA, re-opened small position on 3/5/25 in CTA - this is a managed-futures ETF. Thesis: Like most investors, I have oodles of bonds & stocks. But I am under-exposed to commodities. IMO the managed-futures space is a lower-volatility means to access commodity prices. To my mind, CTA compares favorably vs OEF mgd-futures funds in terms of volatility/returns..
Other 'nibbles' during the past 2 days:
a)In Roth - Added QQQI & BITO (bitcoin futures/option income ETF). b) In Trad-IRA added to FBTC (bitcoin), GQGPX (EM), and new position in FSCO (private credit CEF). FSCO has a history of lessened volatility and divd increases. Also added to my home-made 'stapled market-neutral fund' combining QDSNX/REMIX/JMNAX. c. In taxable account: adding to MSFT and QQQ position. Opened small position in DFAT (DFA s/c value ETF).
edit: in taxable account, added to 'ABEV'- Brazilian beer company. Buying simply on techicals -- most EM sold off hard at year-end, many are in the process of 'springing back' to their trendlines. Beer is a pretty stable business. I've done plenty of 'research' on beer.
If you ever want to know how volatile CEFs are, try putting a bunch together (in roughly equal amounts) on a pie chart and watching them jump around. Swapped out a couple from my collection of 7 today, adding TEI (EM credits) from Templeton and LGI (total global return) from Lazard. The remainder of the lineup: JEQ, CPZ, BWG, WEA, GGN. Together they comprise 17.5% of portfolio. Should be interesting.
Comments
Logic dictates that the markets should have been reacting to new US policy changes that will effect the global economy, but apparently logic plays no part in the short-term market outlook.
Monday’s future market looks bleak, even gold.https://cnbc.com/pre-markets/
https://finviz.com/futures.ashx
Mark your calendar, March 14, 2025. Will the government shut down?
I haven’t looked at gold over the weekend, but my understanding of U.S. equity futures is that they don’t begin to trade until sometime Sunday evening. I may, however, be incorrect in that.
There are so many different ”balls in motion” right now on the domestic political front plus U.S. relationships with former allies and foes that it generates a lot of uncertainty and turmoil.
I think the risk is small - but still very real - of a very deep recession. The high cost to consumers of tariffs (a form of tax) is worrisome. And I share @Junkster’s concerns about the massive government layoffs possibly leading to a weaker economy (and affecting lower rated credit). Once a downward spiral begins it’s not as simple as the Fed just punching a few buttons. But they’ll try their best.
Not much mentioned is the “fear factor”. If retired Moms & Pops start to worry about their Social Security or Medicare being there tomorrow, they may cut back on spending. Walmart seems to have noticed such a trend and sounded a warning in their earnings guidance last week. One reason markets were down Friday.
Still - Odds are we will muddle through this. That’s not to ignore valuations. Some appear out of whack. If so, they can correct at any time with or without a recession.
Still, Russia finally has won the Cold War in the same way the South finally has won the Civil War. What an ending to the postwar Boomer era.
https://www.morningstar.com › stocks › pinx › quote
PRYMY is trading at a 41% premium. Price. $35.68. Feb 21 ...
https://www.morningstar.com/stocks/pinx/prymy/price-fair-value
Added: Today another drop, so what is the premium now?
Remaining proceeds will likely go into THOPX and MNHYX. Thinking about selling FFRHX; bank loans have been in the doldrums. Waiting to see how the next episode of Tariff Theater: Beggar thy Neighbor plays out.
“Globalization” was, I think, unjustly scapegoated as a cause of lower income workers’ distress in recent years. A lot of these swing voters felt they could help their situation with an administration that imposed heavy tariffs. Those people may have been wearing blinders, as some are beginning to realize that the “cure” for free-trade / globalization is going to be worse for them than the “blight” they railed against.
Hang onto your hats.
For the moment, I am not convinced that the new taxes on imports will cause inflation, although they will raise prices. In this case, the higher prices will not be the result of too much money chasing too few goods. IIRC, taxes on goods tend to discourage purchases. So I think we are more likely to see switches in buying habits to cheaper goods, or doing without.
Perhaps the potential for bond vigilantism will come into better focus when Mr. Market's attention span swings to the budget process.
When the facts change, or even become apparent, I'll be ready to change my mind.
Thesis: Like most investors, I have oodles of bonds & stocks. But I am under-exposed to commodities. IMO the managed-futures space is a lower-volatility means to access commodity prices. To my mind, CTA compares favorably vs OEF mgd-futures funds in terms of volatility/returns..
Other 'nibbles' during the past 2 days:
a)In Roth - Added QQQI & BITO (bitcoin futures/option income ETF).
b) In Trad-IRA added to FBTC (bitcoin), GQGPX (EM), and new position in FSCO (private credit CEF). FSCO has a history of lessened volatility and divd increases. Also added to my home-made 'stapled market-neutral fund' combining QDSNX/REMIX/JMNAX.
c. In taxable account: adding to MSFT and QQQ position. Opened small position in DFAT (DFA s/c value ETF).
edit: in taxable account, added to 'ABEV'- Brazilian beer company. Buying simply on techicals -- most EM sold off hard at year-end, many are in the process of 'springing back' to their trendlines. Beer is a pretty stable business. I've done plenty of 'research' on beer.
(All inside a Roth IRA)