Closing the wealth gap

22,106 Views | 526 Replies | Last: 2 mo ago by DiabloWags
calbear93
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Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure while high inflation still exists will create uncertainty that will do more damage to value of assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control. As you may recall, the late 70s stagflation resulted partly from the Fed extending loose monetary policies despite inflationary pressures as a response to political pressure. The resulting stagflation did not help the asset owners at all.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions. For people like us with means and with a family, we would never live in a high crime neighborhood and expose our spouses and kids to violent crime. So, all of this is theoretical and academic for us. We have our gated communities with our own neighborhood security and, if needed, can hire our own personal security like some of the liberal politicians. Those who are most impacted are those who have no choice.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
Unit2Sucks
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calbear93 said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure will create uncertainty that will do more do manage assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
I'm not sure I see the connection between what you are saying is happening with crime and what is actually happening with crime. Crime is still historically low. What always happens during democratic administrations is conservatives say crime is rampant and out of control and it's the president's fault. They said it during Clinton and Obama, even while crime was decreasing. Obviously, some crimes are on the rise at the moment, but we are still seeing a prolonged downward trend. I know you are no longer a part of the mainstream conservative movement, but I think that a lot of the excessive handwringing is just rolling out the old playbook. It's less clear to me that a change in crime is anything other than an incidental symptom of other things happening in our society - like an increase in unemployment, indigence, etc.

As for investing, my hope is to largely avoid individual securities in the public market and I haven't purchased any in years. I invest in private companies (both directly, through a number of VC funds and through my own career) and feel like that's a better place for me to be.

But, just as I don't recommend people invest in individual public securities, I don't recommend people invest in individual private ones. Despite the fact that I have a privileged position of access to opportunities (through friends, colleagues, investors in my company, etc.), I'm still taking a fairly conservative approach right now for a variety of reasons but chief among them because I am seeing first hand how inflation of asset prices has distorted private valuations.

If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.

Here's an interesting article written by a16z as just one example on how tricky investing without context in a technology class can be. I've been fortunate enough to have seen this play out in companies I'm familiar with and in speaking with industry peers, but it can be incredibly challenging for someone a bit farther removed from doing so. For this reason, I continue to feel comfortable recommending that people who want equity exposure (and are looking for advice) should look at broad based index funds and not trade in individual securities.

I personally tend to take a more granular approach to private investing and think more in terms of verticals, founder and team experience, TAM and things like that rather than the deployment of particular classes of technology. Like for example, rather than investing in AI companies, I might focus on DevOps because more and more companies are developing software (for a number of reasons, including how easy it has become) and DevOps is going to be important to power that growth. Rather than just deploying my personal capital in these areas, I've taken my professional focus in this direction. Figuring out how to balance the risk/reward from that decision along with equity investments is in some ways a more important decision for me than which investments I actually make. If I'm successful professionally, my other investments won't matter because some outcomes are binary. More than this really gets beyond the scope of the present conversation but I would just point out that when I talk to people about investing (which isn't infrequent) I focus on correlation of assets, potential wealth creation from their primary business, etc. I don't think it makes sense for my friends making big money at FAANG to pile their financial assets into other FAANG (MANGA now?) companies because black swan events could be specific to one or across the group. Etc.
DiabloWags
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calbear93 said:


While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest.
I like your thinking for those that are young.
But I would be remiss if I didnt mention that there are some sectors of the market that are experiencing a "blood bath".

Look no further than any medical diagnostics company in the cancer screening and liquid biopsy space. Most were cut in half last year, having peaked last February. YTD, some are down another 20 - 30%.. I'm talking GH, EXAS, NTRA, VCYT, and TXG. These are company's with big growth rates, massive TAMs, and very solid management teams that are able to execute at a very high level.
DiabloWags
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calbear93 said:




Now, why Biden thinks his promise to bring bipartisanship and maturity and normalcy meant he had a mandate to be the next FDR is baffling to me, especially someone like me who previously really liked Biden and voted for him.

Agreed 100%.
He never had a mandate, yet the entire Democratic Party behaved as if they did.
Big mistake.
calbear93
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DiabloWags said:

calbear93 said:


While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest.
I like your thinking for those that are young.

But I would be remiss if I didnt mention that there are some sectors of the market that are experiencing a "blood bath". Look no further than any medical diagnostics company in the cancer screening and liquid biopsy space. Most were cut in half last year, having peaked last February. YTD, some are down another 20 - 30%.. I'm talking GH, EXAS, NTRA, VCYT, and TXG.
I think that is a sector issue. COVID is making elective surgery depressed, impacting companies that are not strong on recurring revenue. You tie that to companies that are inflated with high multiples, I suspect you could see a correction. Even DHR has been hit a bit, but I think the fact that they are so high on recurring revenue with a razor and razor blade model for many of their operating companies, I think they can withstand longer. It will be interesting to see what their retention models are for some of their bigger diagnostic companies.
calbear93
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Unit2Sucks said:

calbear93 said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure will create uncertainty that will do more do manage assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
I'm not sure I see the connection between what you are saying is happening with crime and what is actually happening with crime. Crime is still historically low. What always happens during democratic administrations is conservatives say crime is rampant and out of control and it's the president's fault. They said it during Clinton and Obama, even while crime was decreasing. Obviously, some crimes are on the rise at the moment, but we are still seeing a prolonged downward trend. I know you are no longer a part of the mainstream conservative movement, but I think that a lot of the excessive handwringing is just rolling out the old playbook. It's less clear to me that a change in crime is anything other than an incidental symptom of other things happening in our society - like an increase in unemployment, indigence, etc.

As for investing, my hope is to largely avoid individual securities in the public market and I haven't purchased any in years. I invest in private companies (both directly, through a number of VC funds and through my own career) and feel like that's a better place for me to be.

But, just as I don't recommend people invest in individual public securities, I don't recommend people invest in individual private ones. Despite the fact that I have a privileged position of access to opportunities (through friends, colleagues, investors in my company, etc.), I'm still taking a fairly conservative approach right now for a variety of reasons but chief among them because I am seeing first hand how inflation of asset prices has distorted private valuations.

If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.

Here's an interesting article written by a16z as just one example on how tricky investing without context in a technology class can be. I've been fortunate enough to have seen this play out in companies I'm familiar with and in speaking with industry peers, but it can be incredibly challenging for someone a bit farther removed from doing so. For this reason, I continue to feel comfortable recommending that people who want equity exposure (and are looking for advice) should look at broad based index funds and not trade in individual securities.

I personally tend to take a more granular approach to private investing and think more in terms of verticals, founder and team experience, TAM and things like that rather than the deployment of particular classes of technology. Like for example, rather than investing in AI companies, I might focus on DevOps because more and more companies are developing software (for a number of reasons, including how easy it has become) and DevOps is going to be important to power that growth. Rather than just deploying my personal capital in these areas, I've taken my professional focus in this direction. Figuring out how to balance the risk/reward from that decision along with equity investments is in some ways a more important decision for me than which investments I actually make. If I'm successful professionally, my other investments won't matter because some outcomes are binary. More than this really gets beyond the scope of the present conversation but I would just point out that when I talk to people about investing (which isn't infrequent) I focus on correlation of assets, potential wealth creation from their primary business, etc. I don't think it makes sense for my friends making big money at FAANG to pile their financial assets into other FAANG (MANGA now?) companies because black swan events could be specific to one or across the group. Etc.
Good stuff.

By the way, I would never invest in a fund like Cathie Woods' funds. She owns so many that I view as poorly managed or not market leaders. And investing at those high (and still high) valuation makes no sense if you know how much of that was created by monetary policies.

Regarding your last paragraph, I think we are saying the same thing. Looking at disruptive technology and market leaders with great platform is meaningful only if they play in a big enough TAM that is not otherwise already oversaturated or does not have natural adjacent markets that can also be addressed.

And when you address your professional focus, that is also a form of investment. Most of equity investment comes in the form of ownership interest or equity grants that come with your role. However, I am sure when the company goes public, you will want to diversify and not be too leveraged in one or two companies, especially if your income is also tied to your industry or company.

But you are strongly on your way to becoming extremely wealthy, and I commend you for taking care of your finances. I suspect that as you gather more and more wealth through your own decisions and investments, you will realize the harm in people wanting to take a huge chunk because they say you have too much.

By the way, I don't get the comment about high unemployment rate as the reason for higher crime rate in urban areas. Isn't unemployment rate fairly low with excess demand for labor than supply?
DiabloWags
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calbear93 said:

DiabloWags said:


I like your thinking for those that are young.

But I would be remiss if I didnt mention that there are some sectors of the market that are experiencing a "blood bath". Look no further than any medical diagnostics company in the cancer screening and liquid biopsy space. Most were cut in half last year, having peaked last February. YTD, some are down another 20 - 30%.. I'm talking GH, EXAS, NTRA, VCYT, and TXG.
I think that is a sector issue. COVID is making elective surgery depressed, impacting companies that are not strong on recurring revenue. You tie that to companies that are inflated with high multiples, I suspect you could see a correction. Even DHR has been hit a bit, but I think the fact that they are so high on recurring revenue with a razor and razor blade model for many of their operating companies, I think they can withstand longer. It will be interesting to see what their retention models are for some of their bigger diagnostic companies.
Medical Diagnostics is not Med-Tech.
The companies that I mentioned above have nothing to do with surgery.


Unit2Sucks
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calbear93 said:

Unit2Sucks said:

calbear93 said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure will create uncertainty that will do more do manage assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
I'm not sure I see the connection between what you are saying is happening with crime and what is actually happening with crime. Crime is still historically low. What always happens during democratic administrations is conservatives say crime is rampant and out of control and it's the president's fault. They said it during Clinton and Obama, even while crime was decreasing. Obviously, some crimes are on the rise at the moment, but we are still seeing a prolonged downward trend. I know you are no longer a part of the mainstream conservative movement, but I think that a lot of the excessive handwringing is just rolling out the old playbook. It's less clear to me that a change in crime is anything other than an incidental symptom of other things happening in our society - like an increase in unemployment, indigence, etc.

As for investing, my hope is to largely avoid individual securities in the public market and I haven't purchased any in years. I invest in private companies (both directly, through a number of VC funds and through my own career) and feel like that's a better place for me to be.

But, just as I don't recommend people invest in individual public securities, I don't recommend people invest in individual private ones. Despite the fact that I have a privileged position of access to opportunities (through friends, colleagues, investors in my company, etc.), I'm still taking a fairly conservative approach right now for a variety of reasons but chief among them because I am seeing first hand how inflation of asset prices has distorted private valuations.

If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.

Here's an interesting article written by a16z as just one example on how tricky investing without context in a technology class can be. I've been fortunate enough to have seen this play out in companies I'm familiar with and in speaking with industry peers, but it can be incredibly challenging for someone a bit farther removed from doing so. For this reason, I continue to feel comfortable recommending that people who want equity exposure (and are looking for advice) should look at broad based index funds and not trade in individual securities.

I personally tend to take a more granular approach to private investing and think more in terms of verticals, founder and team experience, TAM and things like that rather than the deployment of particular classes of technology. Like for example, rather than investing in AI companies, I might focus on DevOps because more and more companies are developing software (for a number of reasons, including how easy it has become) and DevOps is going to be important to power that growth. Rather than just deploying my personal capital in these areas, I've taken my professional focus in this direction. Figuring out how to balance the risk/reward from that decision along with equity investments is in some ways a more important decision for me than which investments I actually make. If I'm successful professionally, my other investments won't matter because some outcomes are binary. More than this really gets beyond the scope of the present conversation but I would just point out that when I talk to people about investing (which isn't infrequent) I focus on correlation of assets, potential wealth creation from their primary business, etc. I don't think it makes sense for my friends making big money at FAANG to pile their financial assets into other FAANG (MANGA now?) companies because black swan events could be specific to one or across the group. Etc.
Good stuff.

By the way, I would never invest in a fund like Cathie Woods' funds. She owns so many that I view as poorly managed or not market leaders. And investing at those high (and still high) valuation makes no sense if you know how much of that was created by monetary policies.

Regarding your last paragraph, I think we are saying the same thing. Looking at disruptive technology and market leaders with great platform is meaningful only if they play in a big enough TAM that is not otherwise already oversaturated or does not have natural adjacent markets that can also be addressed.

And when you address your professional focus, that is also a form of investment. Most of equity investment comes in the form of ownership interest or equity grants that come with your role. However, I am sure when the company goes public, you will want to diversify and not be too leveraged in one or two companies, especially if your income is also tied to your industry or company.

But you are strongly on your way to becoming extremely wealthy, and I commend you for taking care of your finances. I suspect that as you gather more and more wealth through your own decisions and investments, you will realize the harm in people wanting to take a huge chunk because they say you have too much.

By the way, I don't get the comment about high unemployment rate as the reason for higher crime rate in urban areas. Isn't unemployment rate fairly low with excess demand for labor than supply?

I hear you on the ARK funds.

As for my finances, I don't need any more personal proof points at this point. I've been fairly open in this thread about my feelings regarding wealth inequality. I've never felt like the government was good at allocating resources (most notably through republican welfare aka the military). I've been fortunate throughout my career to have some great opportunities and I'm financially savvy so I've been paying large tax bills for quite a while. I suspect if my company goes public I will continue to not invest in specific public securities and would continue to sprinkle bets in private companies because I enjoy working with early stage companies and supporting entrepreneurs. I would continue to diversify through public index funds. Right now some of my largest holdings (when I look through funds) are late stage private or newly public companies and I expect that to continue to be the case even if my current venture succeeds. At the moment, most of my net worth is in a handful of securities, none of which I am able to control the liquidity of. Within the next 12 months, I'm hopeful to have at least one I can rotate out of.

I know that people know that valuations have gone bonkers, but I'm not sure people really understand how thoroughly this has benefited private investors. I have too many anecdotes to share but the gist of it is that in the old days companies used to go public with valuations in the several hundred million range and early investors would get liquid. Now, the exit valuations are in the billions or more. I can cite a number of examples where investors I know have made 1000x on early investments and that's just not something that can happen in the public markets. It won't be like this forever but it's massively changed the way private funds allocate resources. That's why you are seeing Tiger and other hedge funds jump into earlier and earlier private companies.

With respect to your last point. I think that high unemployment still exists in quite a few pockets and that it's not distributed the way we've seen in the past. Unemployment for college-educated people and those with financial security is close to zero. I was in downtown SF yesterday to support my barber and it's pretty obvious how gutted the low wage services sector is right now. The people who can least afford a gap in income are the most at risk right now. During the GFC, I knew a lot of well educated people with strong careers who lost their jobs and took years to recover, if ever. I don't know anyone like that who is struggling (financially) as a result of COVID.
dajo9
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calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.




I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate.
The last time the Fed did Quantitative Tightening (about January 2018 through about August 2019) the 10 year yield went down from about 2.5% to about 1.5%. I would not be surprised at all to see this round of Quantitative Tightening have the exact same impact, which was a small increase in the 10 year yield, followed by a much larger drop in the 10 year yield.

Like I said, the only interest rates the Fed controls are the Fed Funds rate and the discount window. So when you say I am predicting the Fed will go back and forth on interest rates, I have no idea what you are talking about as I'm making no such prediction.
calbear93
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DiabloWags said:

calbear93 said:

DiabloWags said:


I like your thinking for those that are young.

But I would be remiss if I didnt mention that there are some sectors of the market that are experiencing a "blood bath". Look no further than any medical diagnostics company in the cancer screening and liquid biopsy space. Most were cut in half last year, having peaked last February. YTD, some are down another 20 - 30%.. I'm talking GH, EXAS, NTRA, VCYT, and TXG.
I think that is a sector issue. COVID is making elective surgery depressed, impacting companies that are not strong on recurring revenue. You tie that to companies that are inflated with high multiples, I suspect you could see a correction. Even DHR has been hit a bit, but I think the fact that they are so high on recurring revenue with a razor and razor blade model for many of their operating companies, I think they can withstand longer. It will be interesting to see what their retention models are for some of their bigger diagnostic companies.
Medical Diagnostics is not Med-Tech.
The companies that I mentioned above have nothing to do with surgery.



Sorry - not familiar with those companies. Just saw the reference to medical diagnostic companies. Are they worth assessing? I may look into them just out of curiosity. However, if the hospitals are flooded with COVID patients and there is less need or capacity for other services, whether surgery or diagnostics (including bloodwork like chemistry, hematology or immunoassay or cancer screening through molecular), would these companies be impacted? Not familiar enough. What do you think is causing the correction?
calbear93
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dajo9 said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.




I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate.
The last time the Fed did Quantitative Tightening (about January 2018 through about August 2019) the 10 year yield went down from about 2.5% to about 1.5%. I would not be surprised at all to see this round of Quantitative Tightening have the exact same impact, which was a small increase in the 10 year yield, followed by a much larger drop in the 10 year yield.

Like I said, the only interest rates the Fed controls are the Fed Funds rate and the discount window. So when you say I am predicting the Fed will go back and forth on interest rates, I have no idea what you are talking about as I'm making no such prediction.
Maybe I misunderstood. I thought you wrote that instead of raising rates four times (I think they will need to more than 4 to get this inflation down) they may midstream implement QE. Well, you won't implement QE while raising fed funds rate. You would decrease rate and then implement QE to flood with liquidity to supercharge. What was your messaging then on QE implementation by the Fed in the midst of the current plan to increase fed funds rate? By the way, the 10 year yield is based on where they think the economy is going. If they think we are in for an impending recession, the long-term will be less than short-term even if most people prefer liquidity and would need higher interest rate to be stuck in long-term.
DiabloWags
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Unit2Sucks said:




If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.


Her ARKG is already down another 20% this year and we are only 2 weeks into the New Year.
Her portfolio management is absolutely insane.
Dont even get me started.
DiabloWags
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calbear93 said:



Sorry - not familiar with those companies. Just saw the reference to medical diagnostic companies. Are they worth assessing? I may look into them just out of curiosity. However, if the hospitals are flooded with COVID patients and there is less need or capacity for other services, whether surgery or diagnostics (including bloodwork like chemistry, hematology or immunoassay or cancer screening through molecular), would these companies be impacted? Not familiar enough. What do you think is causing the correction?

I would suggest that you get to know these companies, given that they are high growth and facing massive total addressable markets with proven management teams. Dont even begin to compare them to a large-cap company like DHR that is barely growing. These are not "value" companies where you dissect their income statement. It's about GROWTH in a very large TAM and being able to execute.

The big frontier in cancer diagnostics is liquid biopsy.
Being able to detect and/or monitor cancer reoccurrence from a patient via a simple blood draw.

wifeisafurd
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DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.



The FED also has been capable of delivering stagflation.

Let's start with this. At its Dec. 14-15, 2021, meeting, the Federal Open Market Committee (FOMC) said it would maintain the target fed funds rate at a range of 0% to 0.25. This means the policy is no change. I provded a summery of the FED meeting notes above. Goldie Sachs predicted 4 interest rate movements because a certain number of FED committee members said that in the latest meeting minutes. (I posted a summary of the latest minutes above), and if they had said 25 interest rate changes, that is what GS what had said. The reality is it is not policy, just what this minority of committee members hypothecated upon where they see the future. One event, such as Russia invading Ukraine, a policy change by Biden (less BBB, less inflation) a bad strain of C-19, whatever, could change what these guys think for the future instantly.


By the time FED finally delivers an actual Fed Funds rate change, the market already knows which way the FED is going on interest rates and the rates already reflect that (or as pointed out Fed Funds rates are discounted). just as DIWAGS suggested. Why?

The big fallacy here is the FED doesn't control just two rates, it indirectly controls the levers to change interest rates charged by creditors by screwing with the money supply with IORB rates, ON RRP rates, open market operations (OMO), permanent OMO, these days QE etc. before even announcing a formal federal rate change.
All this means stock market investors watch the monthly FOMC meetings like hawks. That is why analysts pay close attention to the OMC to try and decode what the Fed will do. When the Fed wants to adjust interest rates, it moves the range set by IORB and ON RRP rates higher or lower. This causes the banks to raise or lower their interest rates correspondingly. In turn, these rates affect all other interest rates in the economy. The formal announcement of a change in Fed Funds ranges is a formality because the banks have already changed their rates due to jawboning from the Fed using these various tools.

DiabloWags
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wifeisafurd said:


The reality is it is not policy, just what this minority of members hypothecated upon where they see the future.

No one has ever claimed that its policy.
It's called the DOT PLOT.

On Dec.15th, 12 out of 18 FOMC members expected at least 3 rate raises in 2022.
Five members expected 2 rate increases and one member expected one rate hike.

The DOT PLOTS can be viewed at these web-links:

The Fed's New Dot Plot After Its December Rate Meeting: Chart - Bloomberg

The majority of Fed members forecast three interest rate hikes in 2022 to fight inflation (cnbc.com)

Bill Dudley, a former vice-chair of the FOMC said on Monday of this week that the FED may have to raise the Fed Funds Rate "at least 4 or 5 times this year".



wifeisafurd
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Unit2Sucks said:

calbear93 said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure will create uncertainty that will do more do manage assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
I'm not sure I see the connection between what you are saying is happening with crime and what is actually happening with crime. Crime is still historically low. What always happens during democratic administrations is conservatives say crime is rampant and out of control and it's the president's fault. They said it during Clinton and Obama, even while crime was decreasing. Obviously, some crimes are on the rise at the moment, but we are still seeing a prolonged downward trend. I know you are no longer a part of the mainstream conservative movement, but I think that a lot of the excessive handwringing is just rolling out the old playbook. It's less clear to me that a change in crime is anything other than an incidental symptom of other things happening in our society - like an increase in unemployment, indigence, etc.

As for investing, my hope is to largely avoid individual securities in the public market and I haven't purchased any in years. I invest in private companies (both directly, through a number of VC funds and through my own career) and feel like that's a better place for me to be.

But, just as I don't recommend people invest in individual public securities, I don't recommend people invest in individual private ones. Despite the fact that I have a privileged position of access to opportunities (through friends, colleagues, investors in my company, etc.), I'm still taking a fairly conservative approach right now for a variety of reasons but chief among them because I am seeing first hand how inflation of asset prices has distorted private valuations.

If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.

Here's an interesting article written by a16z as just one example on how tricky investing without context in a technology class can be. I've been fortunate enough to have seen this play out in companies I'm familiar with and in speaking with industry peers, but it can be incredibly challenging for someone a bit farther removed from doing so. For this reason, I continue to feel comfortable recommending that people who want equity exposure (and are looking for advice) should look at broad based index funds and not trade in individual securities.

I personally tend to take a more granular approach to private investing and think more in terms of verticals, founder and team experience, TAM and things like that rather than the deployment of particular classes of technology. Like for example, rather than investing in AI companies, I might focus on DevOps because more and more companies are developing software (for a number of reasons, including how easy it has become) and DevOps is going to be important to power that growth. Rather than just deploying my personal capital in these areas, I've taken my professional focus in this direction. Figuring out how to balance the risk/reward from that decision along with equity investments is in some ways a more important decision for me than which investments I actually make. If I'm successful professionally, my other investments won't matter because some outcomes are binary. More than this really gets beyond the scope of the present conversation but I would just point out that when I talk to people about investing (which isn't infrequent) I focus on correlation of assets, potential wealth creation from their primary business, etc. I don't think it makes sense for my friends making big money at FAANG to pile their financial assets into other FAANG (MANGA now?) companies because black swan events could be specific to one or across the group. Etc.
I admittedly don't fully understand a lot of this, but it is sure is a lot more interesting than trying to figure out partial word responses from going2roses. Probably why I just talk cap rates which a bunch of simpleton real estate dudes. Thanks for sharing.
bearister
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Richest 0.00001% saw their share of wealth increase tenfold since 1982



https://mol.im/a/10404311
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Send my credentials to the House of Detention
I got some friends inside
Unit2Sucks
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wifeisafurd said:

Unit2Sucks said:

calbear93 said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.
I disagree that they will pivot and decrease rates when the monetary policies are doing what it is supposed to do - reduce inflation by decreasing demand. Moving rates back and forth as a reactionary measure will create uncertainty that will do more do manage assets. One thing that will lead to more depressed assets is higher risk, including those created by a Fed that folks cannot predict. That is one reason why there are so many efforts by the Fed to provide long-leading sentiment and outlook. As one of those asset owners, I would be concerned if the Fed did such a pivot while inflation was still not under control.

As far as crime rate, I am not blaming Biden. I am blaming the liberal policies of bail reform, mandatory decrease in prisons (which was what the CA voters approved) resulting in raising what constitutes grand larceny that gangs exploited, defund the police rhetoric and sometimes execution that reduced police force, etc. More example of hell being paved with good intentions.

Agree with you that for most, broad based funds will suffice but real wealth is created by making the right bets on companies and not on market timing (other than seeing quality like Apple being taken down like overvalued companies like Roku and StitchFix). For someone like you who has access to hedge fund community, you should have some insight into which players are real and which ones are not. Knowing AI, automation, data analytics will continue to be where the real value add will be, it should not be too difficult to filter through the leaders from those who are just riding the wave.
I'm not sure I see the connection between what you are saying is happening with crime and what is actually happening with crime. Crime is still historically low. What always happens during democratic administrations is conservatives say crime is rampant and out of control and it's the president's fault. They said it during Clinton and Obama, even while crime was decreasing. Obviously, some crimes are on the rise at the moment, but we are still seeing a prolonged downward trend. I know you are no longer a part of the mainstream conservative movement, but I think that a lot of the excessive handwringing is just rolling out the old playbook. It's less clear to me that a change in crime is anything other than an incidental symptom of other things happening in our society - like an increase in unemployment, indigence, etc.

As for investing, my hope is to largely avoid individual securities in the public market and I haven't purchased any in years. I invest in private companies (both directly, through a number of VC funds and through my own career) and feel like that's a better place for me to be.

But, just as I don't recommend people invest in individual public securities, I don't recommend people invest in individual private ones. Despite the fact that I have a privileged position of access to opportunities (through friends, colleagues, investors in my company, etc.), I'm still taking a fairly conservative approach right now for a variety of reasons but chief among them because I am seeing first hand how inflation of asset prices has distorted private valuations.

If someone wanted to bet on the high level technology trends that you are talking about, they could invest in some of Cathie Woods' funds. ARKK is down almost 50% from all time highs.

Here's an interesting article written by a16z as just one example on how tricky investing without context in a technology class can be. I've been fortunate enough to have seen this play out in companies I'm familiar with and in speaking with industry peers, but it can be incredibly challenging for someone a bit farther removed from doing so. For this reason, I continue to feel comfortable recommending that people who want equity exposure (and are looking for advice) should look at broad based index funds and not trade in individual securities.

I personally tend to take a more granular approach to private investing and think more in terms of verticals, founder and team experience, TAM and things like that rather than the deployment of particular classes of technology. Like for example, rather than investing in AI companies, I might focus on DevOps because more and more companies are developing software (for a number of reasons, including how easy it has become) and DevOps is going to be important to power that growth. Rather than just deploying my personal capital in these areas, I've taken my professional focus in this direction. Figuring out how to balance the risk/reward from that decision along with equity investments is in some ways a more important decision for me than which investments I actually make. If I'm successful professionally, my other investments won't matter because some outcomes are binary. More than this really gets beyond the scope of the present conversation but I would just point out that when I talk to people about investing (which isn't infrequent) I focus on correlation of assets, potential wealth creation from their primary business, etc. I don't think it makes sense for my friends making big money at FAANG to pile their financial assets into other FAANG (MANGA now?) companies because black swan events could be specific to one or across the group. Etc.
I admittedly don't fully understand a lot of this, but it is sure is a lot more interesting than trying to figure out partial word responses from going2roses. Probably why I just talk cap rates which a bunch of simpleton real estate dudes. Thanks for sharing.
Thanks. I happen to value g4r's perspective even if it ruffles a few feathers. It's good to have a diversity of thought and I think he's been pretty respectful, even if what he says offends some people's sensibilities. I'm often disappointed at the way people respond to him. I would rather have ten of him than a single one of the mindless trolls we have on here who do nothing but purposefully spout misinformation. I do wish g4r would spare us the tiktok links or at least provide more context when he posts them in order to encourage people to engage more but to each their own.
wifeisafurd
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DiabloWags said:

wifeisafurd said:


The reality is it is not policy, just what this minority of members hypothecated upon where they see the future.

No one has ever claimed that its policy.
It's called the DOT PLOT.

On Dec.15th, 12 out of 18 FOMC members expected at least 3 rate raises in 2022.
Five members expected 2 rate increases and one member expected one rate hike.

The DOT PLOTS can be viewed at these web-links:

The Fed's New Dot Plot After Its December Rate Meeting: Chart - Bloomberg

The majority of Fed members forecast three interest rate hikes in 2022 to fight inflation (cnbc.com)

Bill Dudley, a former vice-chair of the FOMC said on Monday of this week that the FED may have to raise the Fed Funds Rate "at least 4 or 5 times this year".




Oh, sure there is forecasting and analysis - best things investment community can do is set expectations. You know the saying that the market is six months ahead. Just that the Reich's of the world start calling these things policy changes, were they are not, but rather than the market reacting to analysis and expert commentary. Guys like Bill Dudley see inflation and start talking to other guys like Bill Dudley, who then talk to guys like Jamie Diamond, and money moves, the market corrects all while the FED starts acting if in fact they change policy. That is why any expected formal future fed rate interest changes are papering things that already happened in the market, as you suggested in your early post. Maybe RR should blame effeciint markets. And if the FED doesn't follow through and change policy due to world events or whatever, than people who bet on Bill Dudley can lose money.
BearForce2
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Big C said:

BearForce2 said:

Bernie Sanders won Iowa, Biden came in 4th. Then somehow Biden became their guy and garnered a record 81 million votes after no one showed up to his campaign rallies.

In the words of Jen Psaki, "Oooh, sounds mysterious!"

It gets better. Bernie won New Hampshire and Biden came in 5th.
DiabloWags
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bearister said:

Richest 0.00001% saw their share of wealth increase tenfold since 1982



https://mol.im/a/10404311

And the majority of those 18 individuals are self-made.
Dont you just LOVE liberty!

AMERICA!

bearister
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DiabloWags said:

bearister said:

Richest 0.00001% saw their share of wealth increase tenfold since 1982



https://mol.im/a/10404311

And the majority of those 18 individuals are self-made.
Dont you just LOVE liberty!

AMERICA!




……and


Cancel my subscription to the Resurrection
Send my credentials to the House of Detention
I got some friends inside
Big C
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DiabloWags said:

bearister said:

Richest 0.00001% saw their share of wealth increase tenfold since 1982



https://mol.im/a/10404311

And the majority of those 18 individuals are self-made.
Dont you just LOVE liberty!

AMERICA!



One thing I will say about capitalism: Some of my more "progressive" acquaintances have asked me, don't I think it's almost criminal, the amount of money that, say, a Jeff Bezos has made. Hell no! Amazon Prime was a great idea and they made it work: I can buy ANYTHING and it's at my doorstep in two days, w/o me even leaving the house? Are you kidding me?!?

Hey, I could've built Amazon myself, if I had what it took. Realistically? No, but here's the thing: I sensed that Amazon Prime was a great idea when I first heard about it. I was welcome to invest in it and go along for the ride! Did I? No, I stayed in indexed funds (did okay there... just wish I had put a larger share of my 401k in equities, back in 2009, because I saw what was going to happen there, too,). The thing is, I COULD have!

Granted, there are plenty of people without much "extra" money to invest, but I think the vast majority of people could come with a little extra every month. And many do. I'd like to see us enable more people to do that.
calbear93
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Big C said:

DiabloWags said:

bearister said:

Richest 0.00001% saw their share of wealth increase tenfold since 1982



https://mol.im/a/10404311

And the majority of those 18 individuals are self-made.
Dont you just LOVE liberty!

AMERICA!



One thing I will say about capitalism: Some of my more "progressive" acquaintances have asked me, don't I think it's almost criminal, the amount of money that, say, a Jeff Bezos has made. Hell no! Amazon Prime was a great idea and they made it work: I can buy ANYTHING and it's at my doorstep in two days, w/o me even leaving the house? Are you kidding me?!?

Hey, I could've built Amazon myself, if I had what it took. Realistically? No, but here's the thing: I sensed that Amazon Prime was a great idea when I first heard about it. I was welcome to invest in it and go along for the ride! Did I? No, I stayed in indexed funds (did okay there... just wish I had put a larger share of my 401k in equities, back in 2009, because I saw what was going to happen there, too,). The thing is, I COULD have!

Granted, there are plenty of people without much "extra" money to invest, but I think the vast majority of people could come with a little extra every month. And many do. I'd like to see us enable more people to do that.
If you have an S&P 500 index fund, you are plenty invested in Amazon and Apple.
82gradDLSdad
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Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.


Anyone investing for retirement should always be loading up on VT or VTI or VOO, etc. You think you're an idiot when the market is going down or when you hear of folks making a killing in Tesla but after a working career of doing it through thick and thin you literally have millions. Ask me how I know.
dajo9
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82gradDLSdad said:

Unit2Sucks said:

calbear93 said:

DiabloWags said:

dajo9 said:


The Fed, with its current anti-inflation zeal, could easily deliver a recession.

The FED always has that capability.

And as I've mentioned in a previous post, they have shown a historical propensity to NOT be able to engineer a "soft" landing. That having been said, anyone that has been involved in the markets knows full well that they are really good at "jawboning" rates to where they want them, without having to do much. And by the time they do actually raise Fed Funds, the market has already discounted that.





I wonder if there is any risk of stagflation? When you have a significant supply chain shock, whether oil embargo and COVID related shortages, doesn't inflation get built in to expectation after awhile that drives pricing? That was why I think the FED may have acted too slowly, trying to say inflation was transitory and not a problem. The CEOs and CFOs that I was talking to in early 2020 was seeing something completely different where supply shortage, hunger game type of behavior by manufacturers that needed supplies (especially chips), and labor shortages were unlike anything they had seen before, with no sign of getting better. Isn't one big danger of continued inflation that it keeps self-perpetuating because suppliers expect inflation to continue, which leads to continued higher prices overall, etc.

I don't think the FED will do something idiotic like Dajo is predicting by going back and forth on interest rate. That would confuse the heck out of the markets and the additional risk would impact valuations even more. I definitely know that they won't do QE anytime soon that will pour gasoline on inflation and supply shortage if they were to pivot so quickly. There is still a danger of idiots in Congress or White House who may think you can keep giving money and stimulating demand when there is a finite amount of supply, with supply not as flexible as just giving money to stimulate demand. One thing that has to happen I believe is we do need a bit of a recession to lower the demand and allow demand to fall down to the level of supply. The question is how transparent and reliable the FED is to allow for that recession not to fall into a depression. Recession seems inevitable unless we invest in the supply and transportation side and taking control of the COVID related labor shortage. That is different than free colleges or keep giving money to everyone without some sharp means testing. Yes, the government won't be the lord of all, but just maybe making people's lives better for most would be enough?

High crime rate, high inflation, high infection rate will not save any party in power no matter which side. There will be a bloodbath during mid-term no matter how much validity there is to this not being their fault (high crime is really their fault though). The only other argument would be that they are powerless anyway so why bother. Not a good counter argument.

If the prices start falling consistently as a result of decreased demand, then hopefully the fear of inflation won't continue to contribute to a self-fulfilling prophecy. We need smarter people than those who think they are too smart to learn from the last stagflation or who thinks either fiscal policy or monetary policy does not matter when there is a supply shock.

While I stopped giving any investment advice long time ago, for those who are young, I will say this. If there is a bloodbath in the market (this is not a bloodbath right now) and all speculators have capitulated, that is the best time to invest big and go long. That is what I did as a young law firm associate. But that also means that they need to do the research now and identify not by hype but by market leading technology or product, balance sheet and cash flow health, and management and it also means they need to live way below their means and have enough dry powder to invest. That daily Starbucks or heavily financed Tesla 3 will cost a lot more when they consider 15 years down the line the lost opportunity for investment. But when the fear in the market takes quality with junk, you can generate wealth by picking up the quality. There is an opportunity to become the wealthy that others will envy instead of spending all those calories coveting and envying. It just requires work, research, and sacrificing that immediate gratification.
I tend to agree with dajo9 that the FED will protect asset owners and from what I've heard from a number of members of the hedge fund community - they tend to agree.

As for high crime rates being "their fault", would love to hear your basis for that.

Finally, while personally I agree with your advice on investing (and followed much of that same playbook early in my career), I think that it's the sort of advice that you can't really give to people because anyone capable of executing on it doesn't need the advice, if that makes sense. The vast majority of people can't beat the market. They can't evaluate market leading technology, they can't ascertain which managers are good (hell, I'm not sure how anyone does that reliably and in a way that is differentiated from others), they can't evaluate financial health from balance sheets, cash flows and footnotes), etc. etc. What you are talking about doing is quite hard. I know that officially it's a bad idea to time the market but what people can do is make certain personal finance tradeoffs when the market really has tanked. That's what I did on the way down in 2008 and early 2009 and there was almost nothing you could buy back then that wouldn't have been a good idea.

So my simpler suggestion is that if the market tanks, consider freeing up cash to move into broad based index funds like Vanguard Total Market (VTI) or any S&P 500 fund. No knowledge is necessary other than recognizing there is blood in the streets. Right now VTI is trading at $233 which is within spitting distance of its all time high. It was around $100 when Trump took office. If it goes below $150, I will move aggressively to buy.


Anyone investing for retirement should always be loading up on VT or VTI or VOO, etc. You think you're an idiot when the market is going down or when you hear of folks making a killing in Tesla but after a working career of doing it through thick and thin you literally have millions. Ask me how I know.


There are a lot of ways to get a market index. SPY is my approach. I also like a small percentage in something like VUSTX or TLT as long term U.S. Treasuries are one of the few remaing assets with a strong negative correlation to the stock market.

I expect Fed actions to try to push up interest rates in 2022 to eventually result in lower rates on long term U.S. Treasuries (higher prices).
Out Of The Past
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VGT?
wifeisafurd
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This thread has taken an interesting turn. Maybe there is an investment fund only for equities of companies that are not associated with the evil 1%.
smh
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Out Of The Past said:

VGT?
https://finance.yahoo.com/quote/VGT
calbear93
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wifeisafurd said:

This thread has taken an interesting turn. Maybe there is an investment fund only for equities of companies that are not associated with the evil 1%.


There are plenty of green funds and green bonds. Wonder why progressives here are not focused on investing in those.

I think it is somewhat funny that for the most part, the Blackrock, State Street, Fidelity and T Rowe Price make significant push through their proxy voting guidelines to get companies to adopt more ESG friendly policies but their portfolio managers of their active funds (nothing they can do about passive, index driven funds) will sell socially responsible companies when they disappoint in their financial results or forecasts. Couple of years ago, Blackrock had egg on their face when they made such a big deal about their push to get companies to reduce GHG emission and then it turned out they were investing more and more on fossil fuel companies in their active funds.

People generally talk based on what fills their heart but act based on what fills their wallet.
DiabloWags
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wifeisafurd said:

This thread has taken an interesting turn. Maybe there is an investment fund only for equities of companies that are not associated with the evil 1%.


I saw "this" turn coming a few days back, when progressives continued to beat a dead horse with more "cut and paste"...retweets, Tik Tok posts and vague deflection.

Sadly, even the Bearister's of the world have also fallen prey to the same. When they cant handle the truth, they post dramatic movie memes. LOL!

At some point, you cant deny that the majority (and Im talking 80 - 90%) of the current crop of wealthiest Americans are self-made. They took massive RISKS and were able to tap into our capital markets to fund their innovative and more often than not, "game-changing" technology....employing thousands, improving the quality of life, and generating prosperity for others.

And as Big C pointed out, we all had the opportunity to ride along their "genius" and hard work.
Unit2Sucks
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You guys are starting to sound like Marie Antoinette. I think this is more that there are very fine people on both sides. And lots of terrible people too of course.
calbear93
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Unit2Sucks said:

You guys are starting to sound like Marie Antoinette. I think this is more that there are very fine people on both sides. And lots of terrible people too of course.


I don't think anyone is saying the wealth disparity is healthy. The main point is that tax policies are not cause or the solution. It was the distortion of risk / reward from the monetary policy.

The other point was that people's actions are more meaningful than their words.

Not very controversial.
dajo9
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calbear93 said:

Unit2Sucks said:

You guys are starting to sound like Marie Antoinette. I think this is more that there are very fine people on both sides. And lots of terrible people too of course.


I don't think anyone is saying the wealth disparity is healthy. The main point is that tax policies are not cause or the solution. It was the distortion of risk / reward from the monetary policy.

The other point was that people's actions are more meaningful than their words.

Not very controversial.


You still haven't addressed that the wealth inequality trend predates loose monetary policy
calbear93
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dajo9 said:

calbear93 said:

Unit2Sucks said:

You guys are starting to sound like Marie Antoinette. I think this is more that there are very fine people on both sides. And lots of terrible people too of course.


I don't think anyone is saying the wealth disparity is healthy. The main point is that tax policies are not cause or the solution. It was the distortion of risk / reward from the monetary policy.

The other point was that people's actions are more meaningful than their words.

Not very controversial.


You still haven't addressed that the wealth inequality trend predates loose monetary policy


There is always wealth disparity other than in a communist economy. I thought people were whining about the acceleration of the disparity during the last decade with Musk and Bezos as examples. Well, they got their wealth from a stock market on sugar high.
 
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